United States District Court, W.D. North Carolina, Charlotte Division
J. Conrad, Jr., United States District Judge.
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,
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).
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
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.
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).
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).
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).
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).
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).
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,
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.
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.”).
SECTION 2255 ...