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Pileggi v. United States

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

August 7, 2019

UNITED STATES OF AMERICA, Respondent. Count Victim Source of Wire Location Wire Received Date of Wire Approximate Amount of Wire ND Jamestown, ND $1, 127 ND Jamestown, ND $2, 000 Steele, ND San Francisco $2, 870 Steele, ND Heredia 9/21/05 $1, 424 Desamparados $2, 000 Hailey, ID $1, 125 $1, 000 $1, 125 PJW Wilmington, OH $1, 000 Desamparados $1, 225 $1, 125 EO Bonita Springs, FL Desamparados $2, 250 Desamparados $1, 000 $1, 000 12/15/05 $1, 125


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

         THIS MATTER is before the Court on remand from the Fourth Circuit Court of Appeals with regards to Petitioner's Motion to Vacate, Set Aside or Correct Sentence under 28 U.S.C. § 2255. (Doc. No. 1); see (Doc. Nos. 21, 22).

         I. BACKGROUND

         Petitioner was charged along with 13 co-defendants in a fraudulent sweepstakes call-center scheme run out of Costa Rica which targeted United States citizens. Petitioner, a Canadian citizen, was alleged to have owned and managed one or more of the call centers. Petitioner was charged by Superseding Bill of Indictment 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. No. 3:06-cr-151, Doc. No. 113) (Superseding Bill of Indictment).

         The case proceeded to a four-day jury trial before the Honorable Frank 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 notebooks full of his and Petitioner's handwritten notes documenting 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. 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 23 counts with which he was charged, forfeiture of $8, 381, 962 from proceeds of the conspiracy, and $32, 761 from proceeds of the scheme to commit wire fraud. (Id., Doc. No. 246-47).

         The Presentence Investigation Report (“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 adjudicated Petitioner guilty, sentenced him 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. 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. 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. No. 3:06-cr-151-RJC, Doc, No. 626) (Second Amended Judgment).

         Petitioner filed the instant Motion to Vacate pursuant to 28 U.S.C. § 2255 on March 31, 2014 raising a number of claims, including that counsel was ineffective to object and raise on appeal a fatal variance between the charges and evidence on the substantive wire fraud in Counts (2) through (17) and (19) through (23). (Doc. No. 1). The Court denied and dismissed the Motion to Vacate finding, inter alia, that no variance occurred. (Doc. No. 16). The Fourth Circuit granted a partial certificate of appealability on a single issue: “[w]hether the district court erred in rejecting Pileggi's claims that his trial and appellate counsel were ineffective in failing to challenge a variance in the evidence supporting Counts 2 to 3.” (No. 17-7473, Doc. No. 6). The Fourth Circuit found that there is no dispute that the Government proved the conspiracy in Count (1) and the fraudulent scheme underlying Counts (2) through (23). However, it remanded for further proceedings because the arguments on appeal were different from those presented before this Court and the record on appeal was not sufficiently developed to permit meaningful appellate review of the scope of the discrepancy between the indictment and evidence and any resulting prejudice. (Doc. No. 21). On remand, the Government filed a Response addressing the variance issue and Petitioner filed a Reply. (Doc. Nos. 25, 29).

         The Government argues that no variances occurred with regards to Counts (12) and (17), and that minor, non-prejudicial variances exist with regards to Counts (2), (3), (5), (7)-(11), (13)-(16), and (21)-(23). The Government asserts that the evidence supports Petitioner's convictions for Counts (4), (6), (19), and (20), however, it is not able to identify and locate all of the evidence that it believes supported the convictions now that more than a decade has elapsed since Petitioner's trial. See (Doc. No. 26) (Trial Exhibit 98, sealed, is missing page 34). The Government argues that, even if the convictions and sentence for Counts (4), (6), (19), and (20) are vacated, there is no need to resentence Petitioner because he received independent, concurrent 240-month sentences for all of the wire fraud counts.

         Petitioner argues in his Reply that, when analyzed on a count-by-count basis, there were fatal variances in the wire fraud counts. Although the Government proved a scheme to defraud, it failed to show that any of the indictment's substantive count allegations occurred and because of “pervasive inconsistencies” between the allegations and evidence. (Doc. No. 29 at 2). He argues that “[e]ven minor discrepancies would raise questions concerning whether the government had sufficient evidence to prove the indictment” and that the “more than mere discrepancies” combined with a lack of evidence and amounted to “a constitutionally fatal variance.” (Id.). The “complete disalignment of the indictment” and proof at trial “calls for … dismissal of the indictment” and that counsel “should have, like any attorney would have, brought the factual variance to the attention of the trial or direct appeal court.” (Doc. No. 29 at 3). Petitioner conclusively asserts that he was prejudiced by the variances between the Superseding Bill of Indictment and the evidence. However, he has made no specific effort to address prejudice. He appears to rely on per se reversible error and makes only conclusory allegations that prejudice occurred. See (Doc. No. 1 at 17) (arguing that there was no testimony at trial to establish the specific instances of wire fraud and that counsel failed to make a satisfactory objection); (Doc. No. 1 at 18) (arguing that a variance argument would have been successful on appeal); (Doc. No. 13 at 6) (arguing that trial counsel's failure to object to the variance and that appellate counsel's failure to present the issue for plain error review “constitut[ed] deficient performance that prejudiced Mr. Pileggi.”). (Doc. No. 29 at 2) (arguing that a fatal variance occurred and that “even minor discrepancies would raise questions concerning whether the government had sufficient evidence to prove the indictment.”).

         II. SECTION 2255 ...

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