Opinion
Nos. 3-00-CR-0389-L(03), 3-05-CV-1858-L.
December 14, 2005
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Defendant Kevin Dewayne Spencer, appearing pro se, has filed a motion to correct, vacate, or set aside his sentence pursuant to 28 U.S.C. § 2255. For the reasons stated herein, the motion should be denied.
I.
Defendant was indicted by a federal grand jury on charges relating to a Ponzi scheme involving a check cashing business and trading programs promising investment in foreign capital markets and various commodities. Succinctly stated, defendant agreed to let the check cashing company, Progressive Financial Services and Group, use bank accounts in the name of his business, Spencer Mortgage, for a fee. Before investor funds were deposited in the Spencer Mortgage bank accounts, the accounts had a negative balance. Defendant made deposits, gave Progressive investors wiring instructions over the telephone, and sent confirmations that he had received the wire transfers. At trial, the government showed that defendant wrote checks to investors for false returns out of the bank accounts and withdrew $581,865.20 for his own use, including $200,000 for a house and $17,200 to pay an old business debt. Defendant also prepared a letter containing false information about Spencer Mortgage that was used by a co-defendant to market the Ponzi scheme, attended sales pitches given by the co-defendant, and did not correct lies told to investors.
Following a nine-day jury trial, defendant was found guilty of one count of securities fraud, one count of interstate transportation of stolen property, 66 counts of wire fraud, eight counts of money laundering, and 10 counts of engaging in monetary transactions in property derived from specified unlawful activity. Punishment was assessed at 78 months confinement followed by supervised release for a period of three years. His conviction and sentence were affirmed on direct appeal. United States v. Dale, 374 F.3d 321 (5th Cir.), cert. denied, 125 S.Ct. 513 (2004). Defendant now seeks post-conviction relief under 28 U.S.C. § 2255.
II.
In two grounds for relief, defendant contends that: (1) his attorney was ineffective for failing to file a motion to dismiss the indictment for lack of subject matter jurisdiction; and (2) his sentence was enhanced based on facts not submitted to the jury or proved beyond a reasonable doubt in violation of the Sixth Amendment to the United States Constitution. Defendant also invokes the cumulative error doctrine.
A.
Defendant's ineffective assistance of counsel claim implicates the validity of 91 of the 95 counts alleged in the indictment. Although many of the arguments made by defendant are difficult to decipher, it appears that he challenges the indictment on the grounds that: (1) the charging instrument does not contain a separate "Introduction;" (2) none of the facts alleged in the first 11 pages are included in any specific count; (3) the indictment does not describe or define an "artifice to defraud;" and (4) there are no specific factual allegations contained in counts that are grouped together.
1.
"The validity of an indictment is governed by practical, not technical considerations." United States v. Crow, 164 F.3d 229, 235 (5th Cir.), cert. denied, 119 S.Ct. 2051 (1999). An indictment is sufficient for jurisdictional purposes "if it contains the elements of the charged offense, fairly informs the defendant of the charges against him, and ensures that there is no risk of future prosecutions for the same offense." United States v. Sims Bros. Const., Inc., 277 F.3d 734, 741 (5th Cir. 2001); see also United States v. Trollinger, 415 F.2d 527, 528 (5th Cir. 1969) (indictment is sufficient if by any reasonable construction it can be said to charge an offense). The court must liberally construe the charging instrument in favor of the government. United States v. Prince, 868 F.2d 1379, 1384 (5th Cir.), cert. denied, 110 S.Ct. 321 (1989).In this case, the first 11 pages of the indictment identify the companies and individuals involved in the Ponzi scheme, describe the relationship between the participants, and explain the scheme, or artifice, to defraud. ( See Indict. at 1-11, ¶¶ 1-19). Although there is no heading labeling those pages as an "Introduction," the law imposes no such requirement. Moreover, "an allegation made in one count of an indictment may be incorporated by reference in another count of the indictment . . . [if] expressly done." United States v. Caldwell, 302 F.3d 399, 412 (5th Cir. 2002), quoting United States v. Knowles, 29 F.3d 941, 952 (5th Cir. 1994) (internal quotations omitted). Such is the case here. The counts charging defendant with a substantive offense, including the counts alleging wire fraud, money laundering, and engaging in unlawful monetary transactions, expressly incorporate by reference "all allegations set forth in the Introduction of this Indictment." ( See Indict., Counts 4-75 at 15, ¶ 1; Counts 83-88 at 29, ¶ 1; Counts 99-100 at 37, ¶ 1). The substantive counts also contain the elements of each charged offense, complete with citations to specific statutes. ( See id., Counts 4-75 at 21, ¶ 2; Counts 83-88 at 30, ¶ 2; Counts 99-100 at 37, ¶ 2). Consequently, it would have been futile for counsel to object to the sufficiency of the indictment on these grounds. See Clark v. Collins, 19 F.3d 959, 966 (5th Cir.), cert. denied, 115 S.Ct. 432 (1994) (counsel not ineffective for failing to make meritless objections).
The elements of wire fraud under 18 U.S.C. § 1343 are: (1) a scheme to defraud that involves the use of wires; and (2) a specific intent to commit fraud in furtherance of the scheme. See United States v. Aggarwal, 17 F.3d 737, 740 (5th Cir. 1994).
The elements of money laundering under 18 U.S.C. § 1956(a)(1)(A)(i) are: (1) conducting or attempting to conduct a financial transaction; (2) which the defendant knew involved the proceeds of unlawful activity; and (3) with the intent to promote the carrying on of specified unlawful activity. See United States v. Pennell, 409 F.3d 240, 243 (5th Cir. 2005).
The elements of engaging in unlawful monetary transactions under 18 U.S.C. § 1957(a) are: (1) engaging in a monetary transaction with property valued at more than $10,000; (2) the property was derived from specified unlawful activity; and (3) the defendant knew that the property was derived from unlawful activity. See United States v. Wilson, 249 F.3d 366, 379 (5th Cir. 2001).
2.
Defendant further contends that his attorney should have objected to the indictment because the 11 page introduction "opens with a listing of a variety of corporations and companies with no explanation as to their `artifice to defraud' which is never described or defined, and then to a variety of `Programs' without making any connection between the programs and the `artifice to defraud.'" (Def. Mem. Br. at 7). According to defendant, the indictment "leaves the jury with no particular coherent scheme to defraud and cannot supply the missing elements of a scheme to defraud." ( Id.). This argument is without merit. The indictment tracks the language of the relevant statutes and contains sufficient facts to inform defendant of the charges against him. Contrary to defendant's assertion, "[t]he indictment need not supply the defendant with the evidentiary details by which the government plans to prove its case." United States v. Armstrong, 951 F.2d 626, 629 (5th Cir. 1992). See also Caldwell, 302 F.3d at 410 (rejecting argument that indictment must specify which actions furthered which scheme to defraud). To the extent defendant attempts to challenge the sufficiency of the evidence to support his conviction, that argument was raised and rejected on direct appeal. Dale, 374 F.3d at 326-27. See United States v. Kalish, 780 F.2d 506, 508 (5th Cir.), cert. denied, 106 S.Ct. 1977 (1986) (claims raised in previous appeal may not be relitigated on collateral review).
3.
In a related argument, defendant complains that "the jury, having no description of the scheme other than `as alleged in the introduction to this [I]ndictment," was left free to pick and choose the `scheme' from wherever they wished among the 85 plus items listed on pages 1-11." (Def. Mem. Br. at 7). Defendant cites this defect as an additional reason for dismissing the indictment because it risked a non-unanimous verdict.
With respect to the wire fraud counts, the jury was not required to match each transfer of funds to a particular scheme. Rather, as the district court instructed the jury, "What must be proved beyond a reasonable doubt is that the accused knowingly devised or participated in a scheme to defraud that was substantially the same as the one alleged in the Indictment; and that the use of interstate wire communication facilities was closely related to the scheme, in that the accused or another participant in the scheme used them or caused them to be used in an attempt to execute or carry out the scheme." (Jury Instr. at 19). See also United States v. Faulkner, 17 F.3d 745, 771-72 (5th Cir.), cert. denied, 115 S.Ct. 193 (1994), quoting United States v. Shively, 927 F.2d 804, 813 (5th Cir.), cert. denied, 111 S.Ct. 2806 (1991) ("Once membership in a scheme to defraud is established, a knowing participant is liable for any wire communication which subsequently take places or which previously took place in connection with the scheme.").
Nor do the allegations of several "unmatched" acts in the counts charging defendant with engaging in unlawful monetary transactions increase the risk of a non-unanimous verdict. In Caldwell, the Fifth Circuit rejected the same argument made by defendant because, inter alia, "the district court made clear in its instructions to the jury that unanimity was required for any positive finding." Caldwell, 302 F.3d at 411 n. 10. Here, the district court instructed the jury:
Counts 83 through 100 of the Indictment allege that either one or both defendants used property derived from three specified unlawful activities. The first is the alleged securities fraud . . . The second is the alleged unlawful transportation of stolen property in interstate commerce . . . The third is the alleged wire fraud . . .
The government does not have to prove all three offenses for you to return a guilty verdict on any count set forth in Counts 83 through 100. Proof beyond a reasonable doubt on any of the three offenses is enough; however, in order to return a guilty verdict, all twelve of you must agree that the same one has been proved. All of you must agree that the government has proved beyond a reasonable doubt that the property involved in the transaction was derived in whole or in part from one or the other of said specified unlawful activities, and all of you must agree as to which specified unlawful activity the property was derived.
(Jury Instr. at 33-34) (emphasis added). Counsel was not required to object to the indictment on these grounds.
4.
Defendant also criticizes his lawyer for failing to object to the absence of specific factual allegations in counts that are grouped together. By way of example, defendant contends that Count 4 of the Indictment, charging him with wire fraud, fails to charge an offense because it alleges only the name of the defrauded investor, the date of the transaction, and the amount of money involved. ( See Indict., Count 4 at 15, ¶ 2). However, the preceding paragraphs incorporate the facts set forth in the first 11 pages of the indictment and allege that defendant "knowingly and willfully cause[d] to be transmitted in interstate and international commerce, by means of wire and radio communications, certain writings, signs, signals, and sounds constituting a wire transfer of funds and money, by and on behalf of the indicated investors, from a state other than the State of Texas, . . . to Bank of America, in the City of Dallas, in the State of Texas, for credit to an account of Spencer Mortgage, for investment in the Spencer Mortgage program each such wire transfer constituting a separate count of this Indictment." ( Id. at 15, ¶ 2). Taken together, these allegations are sufficient to put defendant on notice of the charges against him and plead a bar in jeopardy. See United States v. Gordon, 780 F.2d 1165, 1171 n. 3 (5th Cir. 1986) (holding that mail fraud indictment is sufficient if it alleges date and place of the offence, the persons involved, the scheme to defraud, and a description of the property involved). Because the indictment was not defective, counsel was not ineffective for failing to seek dismissal on jurisdictional grounds.
B.
Next, defendant complains that his sentence was enhanced based on the amount of funds involved in the Ponzi scheme — a fact that was not submitted to the jury or proved beyond a reasonable doubt. In Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), a majority of the Supreme Court held that an enhanced sentence imposed by a judge under the Washington Sentencing Reform Act, which was based on facts neither admitted by the defendant nor found by a jury, violated the Sixth Amendment to the United States Constitution. Blakely, 124 S.Ct. at 2538. The next term, the Court extended its holding in Blakely to invalidate the mandatory nature of the federal sentencing guidelines. United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 759, 160 L.Ed.2d 621 (2005). However, Booker does not apply retroactively to cases on collateral review. Id., 125 S.Ct. at 769 (Breyer, J.), citing Griffith v. Kentucky, 479 U.S. 314, 328, 107 S.Ct. 708, 716, 93 L.Ed.2d 649 (1987) (holding that decision applies "to all cases on direct review") (emphasis added); United States v. Gentry, No. 04-11221, 2005 WL 3317891 at *2 (5th Cir. Dec. 8, 2005) (holding that Booker does not apply retroactively to initial section 2255 motions). Consequently, defendant is not entitled to post-conviction relief on this ground.
Defendant also appears to challenge two aspects of the sentencing recommendation made by the probation department: (1) the failure to receive a two-level reduction for his minor role in the offense; and (2) a seven-level enhancement based on a total loss of more than $5.2 million. ( See Def. Mem. Br. at 21). This claim fails for two reasons. First, the cases cited by defendant involve accountability for the acts of co-conspirators. See, e.g., United States v. Dazey, 403 F.3d 1147 (10th Cir. 2005); United States v. Thomas, 114 F.3d 228 (D.C. Cir.), cert. denied, 118 S.Ct. 635 (1997). Defendant was not charged with conspiracy and his sentence was not calculated under guidelines applicable to that offense. Second, a misapplication of the federal sentencing guidelines does not fall within the narrow category of claims subject to review under 28 U.S.C. § 2255. See United States v. Cervantes, 132 F.3d 1106, 1109 (5th Cir. 1998).
C.
Finally, defendant contends that the combination of these errors deprived him of a fair trial. This argument implicates the cumulative error doctrine, which provides that "an aggregation of non-reversible errors (i.e., plain errors failing to necessitate reversal and harmless errors) can yield a denial of the constitutional right to a fair trial, which calls for reversal." United States v. Munoz, 150 F.3d 401, 418 (5th Cir. 1998), cert. denied, 119 S.Ct. 887 (1999). Here, defendant has failed to establish any error in the conduct of his criminal trial. Therefore, relief is not available under the cumulative error doctrine. See Miller v. Johnson, 200 F.3d 274, 286 (5th Cir.), cert. denied, 121 S.Ct. 122 (2000) (habeas petitioner who failed to demonstrate any error by trial counsel could not establish cumulative error).RECOMMENDATION
Defendant's motion to correct, vacate, or set aside sentence should be denied.
A copy of this report and recommendation shall be served on all parties in the manner provided by law. Any party may file written objections to the recommendation within 10 days after being served with a copy. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b). The failure to file written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error. See Douglass v. United Services Automobile Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996).