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Pileggi v. United States

United States District Court, W.D. North Carolina, Charlotte Division

September 1, 2017



          Robert J. Conrad, Jr. United States District Judge.

         THIS MATTER is before the Court on Petitioner's Motion to Vacate, Set Aside or Correct Sentence under 28 U.S.C. § 2255, (Doc. No. 1).

         I. BACKGROUND

         Petitioner was charged along with thirteen co-defendants in a fraudulent sweepstakes call-center scheme run out of Costa Rica, targeting United States citizens. Petitioner, a Canadian citizen, was alleged to have owned and managed one or more of the call centers. Petitioner was charged with one count of conspiracy in violation of 18 U.S.C. §§ 371 and 2326(2)(A) and (B) (Count 1), and 22 counts of wire fraud in violation of 18 U.S.C. §§ 1343, 2326(2)(A) & (B) and (2) (Counts 2-23); (Crim. Case No. 3:06-cr-151-RJC, Doc. No. 113: Superseding Indictment). The indictment included a notice of forfeiture. (Id., Doc. No. 113 at 18).

         The case proceeded to a four-day jury trial before the Honorable Frank D. Whitney in January, 2008. The Government presented evidence that the United States Postal Service engaged in a large-scale sweepstakes fraud investigation with the assistance of the Costa Rican Government. Costa Rican law enforcement conducted surveillance of several individuals including the Petitioner, and executed a search of sixteen sites simultaneously on May 16, 2006, pursuant to Letters Rogatory submitted by the U.S. Government. The search locations included Tico Racer (an auto accessory store that Petitioner owned with co-conspirator Herman Kankrini), Petitioner's home, and several call centers from which the sweepstakes fraud was being conducted. A Costa Rican law enforcement agent testified that he arrested Petitioner outside the Tico Racer store at around 8:30 AM and seized the red and black thumb drive he was wearing around his neck. Costa Rican agents also seized a number of computers, another thumb drive from the call center a Rohmoser, and other digital evidence during the search. They seized a computer, records, and $238, 000 in cash from Petitioner's home. Agents seized a number of documents from Kankrini's car including handwritten notebooks full of his and Petitioner's handwriting that document victims' losses in the sweepstakes scheme. Costa Rican authorities summarized the seized evidence in an “Acta” for each location, and United States Postal Inspector Jose Gonzalez personally transported the evidence to the United States under secure conditions. Inspector Gonzalez testified that a computer expert from his office, Dan Dorman, then copied the digital information so that the originals would not be damaged. The records, which were introduced at trial, included scripts for defrauding victims, hundreds of victims' personal information, notes regarding the amounts in which the victims had been defrauded, details about the money they victims wired or transmitted via bank accounts, and plans to further defraud various victims. Several fraud victims who were not specifically charged in the indictment testified that they received phone calls informing them of sweepstakes winnings and requiring payment for items such as taxes, customs, courier fees and/or insurance, which they paid, and for which they never received any winnings. One victim, Frank Pytel, who is elderly and infirm, lost more than $800, 000 in the scheme. Three of Petitioner's co-conspirators, Victor Kustra, Herman Kankrini, and Larry Cunningham, testified that Petitioner owned various call centers over the years from which he conducted the sweepstakes fraud, that he was actively engaged in the fraud, that he personally profited from each of the victims' losses, and that no legitimate business was conducted from any of his call centers. Trent Nyffler, who pled guilty to conspiracy, testified that he sold lists of personal information for individuals that Petitioner victimized in the sweepstakes scheme for three or four years.[1]

         Petitioner testified at trial against counsel's advice. His decision to testify prompted counsel to move to withdraw from the representation, which the Court denied, and to request that Petitioner be permitted to testify in the narrative, which the Court granted. Petitioner testified that the Government's witnesses were lying about the timing and circumstances of his arrest, that the information gleaned from his thumb drive and computer had been tampered with, that he knew Kankrini was involved in something illegal that Petitioner failed to report to authorities, that the $238, 000 found in his home was Kankrini's, that he paid for his home and cars through unreported profits from Tico Racer and its associated magazine, and that he was never engaged in a sweepstakes fraud scheme.

         The jury found Petitioner guilty of all twenty-three counts with which he was charged, as well as forfeiture in the amount of that $8, 381, 962 was derived from proceeds that Petitioner obtained, directly or indirectly, as the result of the conspiracy, and that $32, 761 was derived from proceeds that Petitioner obtained, directly or indirectly, as a result of the scheme to commit wire fraud. (Id., Doc. No. 246-47).

         The PSR calculated the base offense level as seven because the offense involves a violation of 18 U.S.C. §§ 371, 1343, 1341, 2314 and 506(a)(2). (Id., Doc. No. 326 at ¶ 40). Thirty levels were added for the following specific offense characteristics: known or reasonably foreseeable loss amount over $7, 000, 000 (20 levels); more than 250 victims (six levels); misrepresentation that the Petitioner and others were acting on behalf of a government agency (two levels); a substantial part of the scheme was committed outside the United States (two levels). (Id., Doc. No. 326 at ¶¶ 410-44). Two levels were added because Petitioner knew or should have known that the majority of the victims were elderly or otherwise particularly susceptible to criminal conduct, four levels were added because Petitioner was an organizer or leader in a criminal activity involving at least five participants. (Id., Doc. No. 326 at ¶¶ 45-47). Another two levels were added for obstruction of justice because Petitioner perjured himself at trial. (Id., Doc. No. 326 at ¶¶ 30-35, 45). He received no adjustment for acceptance of responsibility. (Id., Doc. No. 326 at ¶ 50). The total offense level was forty-three. (Id., Doc. No. 326 at ¶ 51). Petitioner had no criminal history points and a criminal history category of I. (Id., Doc. No. 326 at ¶ 54). The resulting guideline range is life imprisonment, up to five years of supervised release, fines between $25, 000 and $250, 000, and restitution. (Id., Doc. No. 326 at ¶¶ 71, 74, 79, 82).

         The Government moved to dismiss Count 18 at the sentencing hearing, which was granted. (Id., Doc. No. 487 at 3). The Court sentenced Petitioner to a total of 600 months' imprisonment followed by three years of supervised release, imposed $3, 952, 985 in restitution, and entered a final Order of forfeiture in accordance with the jury's verdict. (Id., Doc. No. 357, 424).

         On direct appeal, Petitioner argued that his sentence amounted to a life sentence in violation of the United States' extradition agreement with Costa Rica, and exceeded the statutory maximum for each count, which constituted cruel and unusual punishment. (4th Cir. Case No. 08-4237, Doc. No. 50 at 20). The Fourth Circuit agreed that the sentence was based on clearly erroneous facts, thus making Petitioner's 600-month sentence procedurally unreasonable. It remanded for resentencing before a different judge. United States v. Pileggi, 361 Fed.Appx. 475 (4th Cir. 2010).

         The case was reassigned to the undersigned on remand, and Petitioner was resentenced to a total of 300 months' imprisonment (60 months as to Count 1 and 240 months each as to Counts 2-17 and 19-23 running concurrently with each other and consecutively to Count 1), and restitution in the amount of $20, 726, 005.18. (Crim. Case No. 3:06-cr-151-RJC, Doc. No. 595: Amended Judgment). On appeal, the Fourth Circuit held that the Court was barred from reconsidering the amount of restitution on remand and reinstated the previous restitution order. United States v. Pileggi, 703 F.3d 675 (4th Cir. 2013); see (Crim. Case No. 3:06-cr-151-RJC, Doc, No. 626: Amended Judgment).

         Petitioner filed the instant motion to vacate pursuant to 28 U.S.C. § 2255 on March 31, 2014. (Doc. No. 1). He raises claims of ineffective trial and appellate counsel, trial court error, and prosecutorial misconduct. The Government has filed a response and Petitioner has replied. The § 2255 motion to vacate is ripe for disposition.


         “Habeas review is an extraordinary remedy and will not be allowed to do service for an appeal.” Bousley v. United States, 523 U.S. 614, 621 (1998) (internal citations omitted); United States v. Sanders, 247 F.3d 139, 144 (4th Cir. 2001). In order to collaterally attack a conviction or sentence based upon errors that could have been but were not pursued on direct appeal, a petitioner must show cause and actual prejudice resulting from the errors of which he complains or he must demonstrate that a miscarriage of justice would result from the refusal of the court to entertain the collateral attack. See United States v. Frady, 456 U.S. 152, 167-68 (1982); United States v. Mikalajunas, 186 F.3d 490, 492-93 (4th Cir. 1999); United States v. Maybeck, 23 F.3d 888, 891- 92 (4th Cir. 1994). Actual prejudice is then shown by demonstrating that the error worked to petitioner's “actual and substantial disadvantage, ” rather than just creating a possibility of prejudice. See Satcher v. Pruett, 126 F.3d 561, 572 (4th Cir. 1997) (quoting Murray v. Carrier, 477 U.S. 478, 494 (1986)). To establish cause based upon ineffective assistance of counsel, a petitioner must show that the attorney's performance fell below an objective standard of reasonableness and that he suffered prejudice as a result. See Murray, 477 U.S. at 488; Strickland v. Washington, 466 U.S. 668, 687 (1984). In order to demonstrate that a miscarriage of justice would result from the refusal of the court to entertain the collateral attack, a petitioner must show actual innocence by clear and convincing evidence. See Murray, 477 U.S. at 496.


         The Sixth Amendment to the U.S. Constitution guarantees that in all criminal prosecutions, the accused has the right to the assistance of counsel for his defense. See U.S. Const. Amend. VI. To show ineffective assistance of counsel, Petitioner must first establish deficient performance by counsel and, second, that the deficient performance prejudiced him. See Strickland, 466 U.S. at 687-88. The deficiency prong turns on whether “counsel's representation fell below an objective standard of reasonableness ... under prevailing professional norms.” Id. at 688. A reviewing court “must apply a ‘strong presumption' that counsel's representation was within the ‘wide range' of reasonable professional assistance.” Harrington v. Richter, 562 U.S. 86, 104 (2011) (quoting Strickland, 466 U.S. at 689). The Strickland standard is difficult to satisfy in that the “Sixth Amendment guarantees reasonable competence, not perfect advocacy judged with the benefit of hindsight.” See Yarborough v. Gentry, 540 U.S. 1, 8 (2003). The prejudice prong inquires into whether counsel's deficiency affected the judgment. See Strickland, 466 U.S. at 691. A petitioner must demonstrate “a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome.” Id. at 694. In considering the prejudice prong of the analysis, a court cannot grant relief solely because the outcome would have been different absent counsel's deficient performance, but rather, it “can only grant relief under . . . Strickland if the ‘result of the proceeding was fundamentally unfair or unreliable.'” Sexton v. French, 163 F.3d 874, 882 (4th Cir. 1998) (quoting Lockhart v. Fretwell, 506 U.S. 364, 369 (1993)). Under these circumstances, the petitioner “bears the burden of affirmatively proving prejudice.” Bowie v. Branker, 512 F.3d 112, 120 (4th Cir. 2008). If the petitioner fails to meet this burden, a “reviewing court need not even consider the performance prong.” United States v. Rhynes, 196 F.3d 207, 232 (4th Cir. 1999), vacated on other grounds, 218 F.3d 310 (4th Cir. 2000).

         The Sixth Amendment right to the assistance of counsel during criminal proceedings extends to the plea-bargaining process. See Missouri v. Frye, 566 U.S. 133 (2012). Thus, criminal defendants are “entitled to the effective assistance of competent counsel” during that process. Lafler v. Cooper, 566 U.S. 156, 162 (2012) (internal quotation marks omitted); Merzbacher v. Shearin, 706 F.3d 356, 363 (4th Cir. 2013). As a general rule, defense counsel has the duty to communicate formal offers from the prosecution to accept a plea on terms and conditions that may be favorable to the accused. Frye, 566 U.S. at 145. To show prejudice from ineffective assistance of counsel where a plea offer has lapsed or been rejected because of counsel's deficient performance, defendants must demonstrate a reasonable probability they would have accepted the earlier plea offer had they been afforded effective assistance of counsel, as well as a reasonable probability the plea would have been entered without the prosecution canceling it or the trial court refusing to accept it. Id. at 147. It is necessary to show a reasonable probability that the end result of the criminal process would have been more favorable by reason of a plea to a lesser charge or a sentence of less prison time. Id.

         Strickland also applies in the context of appellate representation. To show prejudice in such cases, a petitioner must show a “reasonable probability ... he would have prevailed on his appeal” but for his counsel's unreasonable failure to raise an issue. Smith v. Robbins, 528 U.S. 259, 285- 86 (2000); see also United States v. Mannino, 212 F.3d 835, 845-46 (3d Cir. 2000) (“The test for prejudice under Strickland is not whether petitioners would likely prevail upon remand, but whether we would have likely reversed and ordered a remand had the issue been raised on direct appeal.”).

         Rule 4(b) of the Rules Governing Section 2255 Proceedings provides that courts are to promptly examine motions to vacate, along with “any attached exhibits and the record of prior proceedings . . .” in order to determine whether the petitioner is entitled to any relief on the claims set forth therein. After examining the record in this matter, the Court finds that the arguments presented by Petitioner can be resolved without an evidentiary hearing based on the record and governing case law. See Raines v. United States, 423 F.2d 526, 529 (4th Cir. 1970).


         A. Claims of Trial Court Error and Prosecutorial Misconduct.

         The Respondent asserts that many of Petitioner's claims are procedurally defaulted from § 2255 review.

         Petitioner's claims of prosecutorial misconduct and trial court error could have been, but were not, raised on direct appeal. Therefore these claims are procedurally defaulted from § 2255 review absent a showing of cause and prejudice or actual innocence. Petitioner concedes in his § 2255 motion to vacate that none of his claims had been raised previously because “the grounds necessarily involve operative facts unavailable at the time of direct appeal.” (Doc. No. 1 at 10).

         Petitioner's suggestion that his claims of prosecutorial misconduct and trial court error could not have been raised earlier because they are based on newly discovered facts is rejected. Petitioner was present at the entire trial and sentencing proceedings and was therefore well aware of the factual basis of these claims. The fact that he might not have appreciated their legal significance until later does not excuse his failure to raise them in the district court and/or on direct appeal. See Rose v. Lee, 252 F.3d 676, 687 (4th Cir. 2001) (“a petitioner cannot establish cause when the facts underlying the claim were in existence upon a reasonably diligent search.”); United States v. Pettiford, 612 F.3d 270, 281 (4th Cir. 2010) (§ 2255 relief was unavailable where the facts underlying petitioner's challenges to his prior convictions were available at sentencing).

         In his Reply, Petitioner argues for the first time that his procedurally defaulted claims are excused by ineffective assistance of trial and appellate counsel, and because they are violations of due process.[2] (Doc. No. 13 at 15).

         As a preliminary matter, there is no general procedural default exception for claims of due process violations. See generally Bousley, 523 U.S. at 621 (challenge to the voluntariness of a guilty plea is procedurally defaulted if it is not raised on direct appeal); Peveler v. United States, 269 F.3d 693 (6th Cir. 2001) (due process claim is procedurally defaulted if it is not raised on direct appeal or excused by a showing of cause and prejudice or actual innocence); Guyton v. United States, 447 Fed.Appx. 136 (11th Cir. 2011) (same); United States v. Aguilar-Ortiz, 86 Fed.Appx. 390 (10th Cir. 2004) (same).

         When using ineffective assistance of counsel to excuse procedural default of another independent claim, counsel must have been so wholly deficient as to violate Petitioner's Sixth Amendment right. Edwards v. Carpenter, 529 U.S. 446, 451 (2000) (citing Murray, 477 U.S. at 488-89). Thus, Petitioner must show that by failing to challenge these issues, counsel's performance fell below an objective standard of reasonableness, and that he was prejudiced by such constitutionally deficient representation. Strickland, 466 U.S. at 668. The Supreme Court has explained that while ineffective assistance of counsel may establish cause for a procedural default, “the mere fact that counsel failed to recognize the factual or legal basis for a claim, or failed to raise the claim despite recognizing it, does not constitute cause for a procedural default.” Murray, 477 U.S. at 486.

         Petitioner's assertion that his procedurally defaulted claims were not raised at trial or on appeal because of counsel's deficient performance falls short of establishing “cause” for his procedural default. See Fakih v. United States, 2011 WL 4402763 at *2 (W.D. N.C. Sept. 21, 2011) (petitioner's blanket conclusory assertion as to his procedurally defaulted claims that such claims were not raised on appeal because of “appeal counsel deficient performance” falls short of establishing “cause” for his procedural default). Neither trial nor appellate counsel was objectively unreasonable for failing to raise these claims because they are meritless for the reasons that follow, and therefore, ineffective assistance of counsel does not excuse his procedural default of these claims and they are dismissed.

         (1) Petitioner claims that the Government engaged in misconduct by: (a) knowingly presenting and failing to correct false testimony at trial; (b) presenting improperly seized evidence at trial; (c) presenting altered or adulterated computer data while ensuring the computer expert was unavailable to testify; (d) unfairly commenting on Petitioner's guilt; and (e) commenting on Petitioner's silence.

         (a) First, Petitioner contends that the Government knowingly presented false testimony by failing to correct co-defendant Andreas Leimer's testimony which led to the search warrant and indictment. Further, the Government presented Inspector Gonzalez's testimony that the information Leimer provided to the Government was always truthful, whereas the Government knew that Leimer had been convicted of making false statements, thus rendering Gonzalez's testimony inaccurate.

         “[A] State may not knowingly use false evidence, including false testimony, to obtain a tainted conviction.” Napue v. Illinois, 360 U.S. 264, 269 (1959). “This is true regardless of whether the [g]overnment solicited testimony it knew or should have known to be false or simply allowed such testimony to pass uncorrected.” United States v. Kelly, 35 F.3d 929, 933 (4th Cir. 1994). A new trial is required when the government's knowing use of false testimony could affect the judgment of the jury. See Giglio v. United States, 405 U.S. 150, 154 (1972). However, a new trial is not automatically required whenever a “combing of the prosecutors” files after the trial has disclosed evidence possibly useful to the defense but not likely to have changed the verdict. Id. (quoting United States v. Keogh, 391 F.2d 138, 148 (2d Cir. 1968)); United States v. Bartko, 728 F.3d 327, 335 (4th Cir. 2013).

         To the extent that Petitioner claims that the Government knowingly presented or failed to correct Leimer's testimony is premised on an incorrect factual basis because Leimer did not testify at trial. See Raines, 423 F.2d at 529 (“Where the files and records conclusively show that the prisoner is entitled to no relief, summary dismissal is appropriate.”).

         Petitioner's claim that the Government knowingly presented Leimer's false statements via Inspector Gonzalez's testimony, is based on incorrect factual allegations and is meritless.

         Inspector Gonzalez testified at trial that he interviewed Leimer pursuant to a subpoena in November, 2005. The prosecutor asked whether Gonzalez “obtain[e]d any information that furthered [his] sweepstakes investigation from Mr. Leimer, ” and Gonzalez responded “[y]es, sir, I did.” (Id., Doc. No. 402 at 33). Defense counsel objected when the prosecutor asked Gonzalez to summarize the information gained from Leimer, and the Court ruled that the witness could explain why he took certain steps in the investigation. (Id., Doc. No. 402 at 34). Gonzalez went on to testify that Leimer acknowledged he owned two Vonage phone number boxes that were associated with the sweepstakes fraud and installed them in Costa Rica. (Id., Doc. No. 402 at 34).

         On cross-examination, Gonzalez testified that Leimer was charged as a co-conspirator in this investigation and he is a fugitive somewhere in Costa Rica or Central America. (Id., Doc. No. 402 at 171). Gonzalez then testified that Leimer initially cooperated with the investigation and law enforcement was able to corroborate the information he provided. (Id., Doc. No. 402 at 171-72). However, Leimer was charged with making false statements after he testified before the grand jury. (Id., Doc. No. 411 at 134).

         Petitioner has failed to show that Gonzalez's testimony based on the information Leimer initially provided during the investigation, was false, or that the Government knew of its falsity. Moreover, the issue of Leimer's credibility was before the jury regarding his perjury charge, and therefore, his veracity was before the jury for consideration.

         (b) Next, Petitioner complains that the Government introduced at trial evidence that was improperly shipped to the United States before Petitioner was extradited. Further, items seized from the Tico Racer call center were outside the ambit of discovery, and a thumb drive was improperly seized.

         As a preliminary matter, to the extent that Petitioner suggests any evidence should have been suppressed under the Fourth Amendment's exclusionary rule, this argument fails because he is a Canadian citizen who was arrested, and whose property was seized, in Costa Rica. The Fourth Amendment has no application under these circumstances. See United States v. Verdugo-Urquidez, 494 U.S. 259, 261 (1990). Therefore, any restrictions on the search and seizure in Costa Rica “must be imposed by the political branches through diplomatic understanding, treaty, or legislation.” Id. at 275.

         To the extent Petitioner seeks relief in the instant case pursuant to the United States' Extradition Treaty with Costa Rica, and assuming that Petitioner has standing to raise the issue, [3]this claim fails.

         Petitioner's arguments that the search of the Tico Racer location somehow exceeded the scope of the permissible search, and that a thumb drive was improperly seized, are refuted by the record. Inspector Gonzalez testified that he submitted Letters Rogatory to the Costa Rican government requesting intelligence information, surveillance, search warrants, bank records, and business documents regarding several individuals including Petitioner. (Id., Doc. No. 402 at 33). The Costa Rican judiciary approved the Letters Rogatory and assigned the matter to the fraud section of their Department of Justice. (Id., Doc. No. 402 at 35-36). Costa Rican law enforcement executed a search pursuant to the Letters Rogatory on sixteen different sites on May 16, 2006, including Petitioner's Tico Racer business, and a call center at Rohmoser. (Id., Doc. No. 402 at 41-42). Inspector Gonzalez further testified that items including thumb drives were seized from the various sites on May 16, 2016, including a black and red thumb drive seized from around Petitioner's at Tico Racer, (Id., Doc. No. 402 at 46, 58-59), and another thumb drive from the call center at Rohmoser, (Id., Doc. No. 402 at 83-84). Inspector Gonzalez's testimony established that the Tico Racer search was authorized by, and that the thumb drives were properly seized pursuant to, Letters Rogatory that were approved and executed by the Costa Rican Government. Petitioner's present contentions to the contrary are refuted by the record, are wholly unsupported by any evidence, and are rejected.

         Petitioner's claim that evidence was improperly transported to the United States before he was extradited is facially insufficient. Petitioner fails to state what specific provision precluded the Government from transporting the evidence pursuant to the Letters Rogatory, or how the trial outcome would have been different had the evidence been maintained in Costa Rica up until his extradition, rather than being transported immediately to the United States by a postal inspector under secure conditions. See (Id., Doc. No. 402 at 54-56).

         (c) Petitioner contends that the Government introduced computer data at trial that was altered or adulterated, ensured that the computer expert was unavailable to testify, and thereby allowed unreliable information to be presented to the jury.

         Inspector Gonzalez testified at trial that a computer expert in his office, Dan Dorman, produced actual duplicates of the digital evidence that was seized in Costa Rica so that the originals would not be damaged. (Id., Doc. No. 402 at 61). Paper printouts of portions of these records were introduced at trial without objection. (Id., Doc. No. 402 at 62-63).

         Petitioner's allegations that the evidence introduced at trial was unreliable or inaccurate, that the Government purposefully ensured that Dorman would be unavailable to testify at trial, and that it purposefully introduced inaccurate evidence, are wholly conclusory and unsupported. No basis for objection is apparent in the record. For instance, Herman Kankrini, who was intimately involved in the sweepstakes conspiracy, testified that the seized records reflected the fraud in which he and Petitioner were involved. See, e.g., (Id., Doc. No. 410 at 38, et seq.).

         Moreover, Petitioner has failed to demonstrate prejudice in light of the other strong evidence of his guilt, including non-digital records such as Petitioner's handwritten notes in a spiral notebook tracking victims' losses, the testimony of Kankrini and Kustra who participated in the sweepstakes conspiracy with Petitioner, the testimony of Nyffeler that Petitioner purchased victim information from him for years, the seizure of over $200, 000 in cash from Petitioner's home, and ...

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