MICHAEL R. MERZ, Magistrate Judge.
This § 2255 case is before the Court for a report and recommendation on the merits. Chew filed his Motion to Vacate (Doc. No. 180) asserting one Ground for Relief — ineffective assistance of trial counsel who allegedly "failed to subject the Government's case to any meaningful adversarial challenge" in the following ways:
(§ 2255 Motion, Doc. No. 180, PageID 3901-02.) By motion after the evidentiary hearing, Chew added, over Government objection, an additional
Gregory Chew was indicted by the grand jury for this District on one count of money laundering in violation of 18 U.S.C. § 1957 (Doc. No. 3, Count One, PageID 9) and twenty-four counts of structuring financial transactions so as to evade the reporting requirements of 31 U.S.C. § 5313(a) and the regulations promulgated under that statute. Id., Counts Two to Twenty-Five, PageID 10-11. Having initially retained attorney Patrick J. Hanley, he had Ms. Flagg substituted as counsel on June 29, 2009 (Doc. No. 7).
On July 15, 2009, the grand jury returned a superseding indictment which added counts for conspiracy, mail fraud, and wire fraud and joined Richard Confer and Peggy Pierson as defendants (Doc. No. 28). On motion of the United States, Counts 4, 27, and 31 of the Superseding Indictment were dismissed as to Gregory Chew only (Doc. No. 68). The case was tried to a jury in March 2010 with Ms. Flagg representing Chew and attorney Lawrence Greger representing co-Defendant Peggy Pierson who was then Chew's spouse. Pierson was acquitted of the charges against her, but Chew was found guilty as charged in Counts 1, 26, 28, 29, 30, 32, 33, and 34 and not guilty on Counts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25 (Verdicts, Doc. No. 91). Attorney John Scaccia entered his appearance as co-counsel on January 28, 2011, for purposes of dealing with the loss mitigation hearing (Doc. No. 140). After making a finding as to the amount of loss attributable to Chew for sentencing purposes, Judge Rose sentenced Chew to sixty months imprisonment on May 23, 2011 (Doc. Nos. 151, 153, 154). In doing so he departed downward by over a year from the applicable sentencing guideline range.
Chew appealed, but the Sixth Circuit affirmed. United States v. Chew, 497 Fed. Appx. 555 (6th Cir. 2012). As relevant to his Motion to Vacate, Chew asserted on appeal that his conviction was not supported by sufficient evidence. In rejecting that claim the Sixth Circuit wrote:
Id. at 2911.
Id. at 561-64.
The instant Motion to Vacate was filed July 10, 2013 (Doc. No. 180). An evidentiary hearing commenced on February 21, 2014, and was completed on March 5, 2014 (Minute Entries on docket for relevant dates). Attorneys Greger and Scaccia appeared as witnesses for Chew during the hearing. The testimony has been transcribed (Doc. Nos. 206-12) and the Motion to Vacate is ripe for decision on the post-hearing briefs (Doc. Nos. 217, 220-21).
The governing standard for ineffective assistance of counsel is found in Strickland v. Washington, 466 U.S. 668 (1984):
466 U.S. at 687.
With respect to the first prong of the Strickland test, the Supreme Court has commanded:
466 U.S. at 689.
As to the second prong, the Supreme Court held:
466 U.S. at 694. See also Darden v. Wainwright, 477 U.S. 168 (1986); Wong v. Money, 142 F.3d 313, 319 (6th Cir. 1998); Blackburn v. Foltz, 828 F.2d 1177 (6th Cir. 1987).
In his First Claim, Chew asserts Ms. Flagg "conducted no meaningful investigation of the case and failed to hire an investigator. . ." (Post-Hearing Brief, Doc. No.217, PageID 5313). The failure to hire an investigator is undisputed. In terms of reviewing the documents the Government made available in discovery, Mr. Chew testified he and Ms. Flagg went together to a warehouse where the documents were stored once or twice for a couple of hours, reviewed a couple of hundred documents, and copied 150 to 200 of them. Id. at PageID 5297. This is contrasted with the ten to fourteen full days that co-defendant Pierson's attorney, Lawrence Greger, testified he spent reviewing the produced documents. Id.
Although Chew has shown Ms. Flagg spent less time reviewing documents than did Mr. Greger, he has not shown any prejudice arising from the amount of review that was done. That is, he has not shown what more would or could have been discovered which would probably have affected the outcome of the case, given that he was acquitted on most counts. What more is in the documents that Ms. Flagg could have discovered if she had copied more than 150-200 of them? Without some showing of what more was in the documents that would have been useful or for that matter what an investigator could have found, there is no proof of ineffective assistance of trial counsel on Claim One.
Chew testified Ms. Flagg told him her strategy would be to subpoena numerous individuals to testify about the specific transactions involved in the case as well as the state of the real estate industry at the time and he agreed with that strategy. Id. at PageID 5298.
On February 16, 2010, ten days before trial, Ms. Flagg moved the Court to issue subpoenas for the keepers of records of Huntington National Bank at three locations, Liberty Savings Bank in Centerville, Fifth Third Bank in Bellbrook, and JP Morgan Chase Bank in Dayton; Craig Looper; Michael Looper; Timothy Gilchrist; Jeff Compton; Dejuan Ware; bank officers Debbie Gross, Faye Fedders, Linda Robinson, Sarah Tullis, Brenda Baker, and Angela Trout; and Richard Confer (Doc. No. 59, PageID 284-85). She represented that these witnesses were necessary for trial and indeed "the Defendant cannot safely go to trial without them." Id. at PageID 285. She also requested that Peggy McCormick, a local process server, be appointed to make service. Id.
The Motion was granted and the subpoenas issued. It is undisputed that none of these witnesses was called in the defense case in chief, although the records keepers were called by the Government or not needed. Ms. McCormick, who has a reputation as one of the best process servers in the area, was able to find appraiser Craig Looper, but unable to serve Messrs. Confer, Looper, Gilchrist, Compton, and Ware. Id. at PageID 5299.
As Chew admits and the Sixth Circuit's opinion makes clear, Richard Confer was the Government's "star" witness. He was added to the case as a co-defendant in the Superseding Indictment and entered into a Plea Agreement with the Government on February 19, 2010, about a week before trial (Doc. No. 60).
Chew takes contradictory positions about Confer, complaining in this Claim that Ms. Flagg did not successfully subpoena him and in Claim 4 that she did not successfully cross-examine him. Given Confer's testimony and the fact that he was present for trial had the defense needed to call him, Chew suffered no prejudice from Attorney Flagg's failure to subpoena him.
To prove deficiency on this Claim, Chew notes that Ms. Flagg asked Judge Rose to "enforce" her subpoenas just before trial and he responded that he would enforce those that had been properly served. A competent attorney of course knows that the Court cannot enforce subpoenas that have not been served and the inference Chew wants the Magistrate Judge to draw is that Ms. Flagg did not know this and acted incompetently in failing to provide Ms. McCormick with adequate addresses for these witnesses.
However, assuming it was deficient performance to fail to subpoena Michael Looper, Timothy Gilchrist, Jeff Compton,
Chew's Second Claim of ineffective assistance of trial counsel fails for lack of proof of prejudice.
Chew asserts that Ms. Flagg provided ineffective assistance of trial counsel when she failed to call an expert to explain the status of the real estate industry at the time of the transactions which gave rise to the charges.
On November 3, 2009, Ms. Flagg moved the Court to provide funds to retain a mortgage fraud/structuring expert and in fact suggested Thomas Lekan as that expert, representing to the Court that he had been qualified as an expert on these subjects in other courts in Ohio (Motion, Doc. No. 53, PageID 265.) That Motion was granted and Ms. Flagg did retain and consult with Mr. Lekan. He was not called as a witness at trial, apparently because he advised Ms. Flagg shortly before trial that his testimony would not be helpful to Chew. However, he did provide Ms. Flagg with a power point presentation to acquaint her with the subjects on which he was retained and Chew was acquitted on all the structuring counts on which he was indicted.
Chew argues that, instead of Mr. Lekan, Ms. Flagg should have retained someone like William Alexander, a person he testified he identified to her, or Douglas Finke, a real estate appraiser who testified at the loss mitigation hearing. Both men testified at the evidentiary hearing in this § 2255 proceeding.
Douglas Finke testified that he had been appraising real estate for Henkaline and Associates since 1989 (Hrg. Tr. Doc. No. 206, PageID 4066). He is certified as a residential real estate appraiser by the State of Ohio for one to four-family homes. Id. at PageID 4067-69. As an appraiser, he is usually contacted by the prospective lender on a property to do the appraisal. Id. at PageID 4070. Having looked at the property, he would then begin to search for comparable properties that had recently sold. Id. at PageID 4071-73. Various sources are available for that information, including the Multiple Listing Service of the Dayton Area Board of Realtors ("MLS"). Id. at PageID 4073-74. Appraisals are to be done in accordance with the Uniform Standards of Professional Appraisal Practices. Id. at PageID 4074. The MLS was not widely used by appraisers in 2008 because many did not want to pay for it, but it provides more data from which to do a competent appraisal. Id. at PageID 4075.
Finke testified that the final appraised fair market value of a property is one number, arrived at after making adjustments from comparable properties. Id. at PageID 4077. In addition to original appraisals, he would also do review appraisals — reviewing another appraiser's work to make sure they've done a competent job. Id. at PageID 4078. However, these are usually done with a "desk review" or "drive by" of the property. Id. at PageID 4080.
The real estate appraisal industry was quite different in 2008, in Finke's opinion, than it had been for a number of years before that because of the real estate collapse in 2007. Id. at PageID 4081. The main difference was that appraisers are no longer permitted contact with lenders. Id. at PageID 4081. The reason for this was that lenders could pressure appraisers to come up with a value that suited the lender. Id. at PageID 4081-82. At the same time, it was the lender who chose and compensated the appraiser. Id. at PageID 4082. He would not consider a value that the lender wanted, but is certain there were many appraisers who did. Id. at PageID 4085. Now appraisal management companies have taken over the underwriting of loans and ordering appraisers, largely as a result of Frank Dodd.
Finke had been hired previously in this case by John Scaccia to assist with the loss mitigation proceeding. Id. at PageID 4088. He would have been available to testify if retained to do so in 2009 at the time of trial. Id. He testified at some length about problems he found with the appraisals that had bene done in connection with the five properties at issue at trial. Id. at PageID 4088, et seq. He ultimately testified that the only person responsible for the content of an appraisal is the appraiser himself or herself. Id. at PageID 4118.
William Alexander studied business management at Wright State University and became a loan officer right after graduating in 1997. Id. at PageID 4132-33. He was recruited by a friend who was "producing loans and was doing very well" at Right Choice Mortgage. Id. He successively worked as a loan officer at Charter First Banc, Multi-State Mortgage, and National City Mortgage (later acquired by PNC Bank). Id. at PageID 4134-35. The qualifications for being a mortgage broker have stiffened over time — most of the brokers Alexander knew in the late 1990's and early 2000's were out of the business by the time he testified. Id. at PageID 4138.
Alexander testified the lending standards in the mortgage lending industry from 2003 to 2008 were very loose. Id. at PageID 4141. "There were so many programs that you could find a place to put a borrower into, I almost called it the Wild Wild West." Id. There were programs which required no or very light documentation and in which really low credit scores were acceptable. Id. All sorts of people were coming into the industry from, e.g., pizza businesses. Id. at PageID 4142. Loan officers received no salary; they were paid out of the loans they produced. Id.
Alexander described the kinds of documentation of income required on various loans. Id. at PageID 4149-50. However, the average loan officer on a stated value loan would not even question the potential borrower's stated value. Id. at PageID 4150. On a "no doc" or no document loan, the HUD Form 1003 would be blank on the amount in the bank. Id. at PageID 4152. These subprime loans were as much as 22 percent of the market in 2006, but were down to less than 1% of the market at the time of the § 2255 hearing. Id. at PageID 4154. Alexander characterized the mindset as follows:
Id.
In the loan application process, "sourced funds" are funds as to which the lender knew the source. Id. at PageID 4156. During the mid-2000's, lenders were not checking sources. "Seasoned funds" are those which have been in the borrower's account for sixty days. Id. at PageID 4158. Alexander confirmed Finke's testimony about loan officers communicating the value on a residence to the appraiser and cutting the appraiser out of the business if they didn't get the value they wanted. Id. at PageID 4163.
Summarizing this expert testimony in the Post-Hearing Brief, Chew's present counsel
It is highly doubtful that this testimony would have overcome that of Mr. Confer who was Chew's co-conspirator in these transactions. Chew was complicit in the misrepresentations made to the lending institutions and himself provided the funds from which the borrowers paid the down payments. However "loose" the lending arrangements were, no one testified at the § 2255 hearing that what Chew did in these five transactions was lawful. That Chew knew it was unlawful can be inferred from the secretive methods he used to convey the money.
The argument could perhaps be made that testimony like Finke's and Alexander's would have shown the jury how reckless the whole industry was and that Chew was no more guilty than others. Such an argument is of the variety "everyone is doing it, so it can't be so bad." This would not have been a legitimate argument for counsel to make, coming close to an appeal for jury nullification of the mail fraud and wire fraud statutes as applied to this industry. It is not ineffective assistance of trial counsel to fail to call witnesses who would only have supported such an argument.
Alternatively, testimony such as that given by Finke and Alexander, if presented just to show the state of the real estate industry at the time of these transactions, might have been instructive to the jury about the milieu in which Chew operated. But it cannot be said that background testimony like this would have been critical to the case. Neither Finke nor Alexander testified directly that what Chew did was legal.
The Magistrate Judge concludes it was not ineffective assistance of trial counsel to fail to call at trial experts who would have testified as Finke and Alexander did at the § 2255 hearing.
In his Fourth Claim, Chew asserts Ms. Flagg's cross-examination of Richard Confer was "perfunctory at best." (§ 2255 Motion, Doc. No. 180, PageID 3901-02.) As is clear from the Sixth Circuit's opinion, Confer was by far the most important witness against Chew. But Chew's Post-Hearing Trial Brief is very skimpy in its argument on this claim. What questions should Ms. Flagg have asked that would have undermined the content of Confer's testimony or his credibility, given that the jury knew he had accepted a plea agreement to testify against Chew? What answers would Ms. Flagg have received to those questions which would have been beneficial to Chew's case?
Attorney Lawrence Greger offered his opinion at the hearing that the cross-examination was ineffectual (Doc. No. 217, PageID 5321, without record citation). Mr. Greger has a well-deserved reputation at the local bar for a very vigorous cross-examination style. It is certainly conceivable that, by the style of cross-examination, someone like him may have been able effectively to communicate his own doubt about the case to the jury. The law does not permit a defendant to call an attorney to testify to his opinion that there is reasonable doubt, but a scornful or sarcastic tone in cross-examination may have the same effect. But it is not ineffective assistance of trial counsel to fail to adopt such a style.
Claim Four is without merit.
Although this claim is made in the § 2255 Motion, it is not carried forward in the Post-Hearing Trial Brief (Compare Doc. No. 180 at PageID 3901-02 with Doc. No. 217 at PageID 5313-14).
In his Motion to Vacate, Chew asserted Ms. Flagg provided ineffective assistance of trial counsel when she failed to file a post-conviction motion for judgment of acquittal (Doc. No. 180, PageID 3901-02). Although the Post-Hearing Trial Brief does not say so explicitly, Chew appears to have abandoned this claim because it is not argued. In fact, it is without merit because Ms. Flagg did file a post-conviction motion for judgment of acquittal (Doc. No. 101).
The Court permitted post-hearing amendment of the § 2255 Motion to assert a claim that Ms. Flagg prevented Chew from testifying because the issue had been the subject of testimony during the hearing (Doc. No. 219). However in the Post-Hearing Brief Chew's counsel attempts to expand the claim to include a claim that Ms. Flagg "provided him inadequate advice about the ramifications of testifying." (Doc. No. 217, PageID 5322.) This latter portion is beyond the amendment that was permitted and will not be considered.
Chew correctly argues that the decision whether or not he will testify is the client's alone (Post-Hearing Brief, Doc. No. 217, PageID 5322, citing Rock v. Arkansas, 483 U.S. 44 (1987), and United States v. Webber, 208 F.3d 545 (6th Cir. 2000).
The record reflects that both Mr. Chew and Ms. Pierson rested their cases without presenting any witnesses, including themselves (Trial Tr., Doc. No. 137, PageID 2768.) Chew's counsel has pointed to nothing on the record regarding his taking the stand aside from the citation just given. In the Post-Hearing Trial Brief, Chew's counsel asserts "Mr. Chew testified that when Ms. Flagg told him she wanted to rest without presenting any witnesses or evidence, he insisted on testifying so that someone could tell his side of the story." (Doc. No. 217, PageID 5322 with no record reference.)
Testifying as a witness in his own behalf at the § 2255 evidentiary hearing, Chew testified he told Ms. Flagg he wanted to testify himself at trial (Hrg. Tr., Doc. No. 208, PageID 4540). He testified her response was "that would not be good and she did not want to do it because of my prior conviction." Id. at PageID 4541. Ms. Flagg's testimony on this subject was much more extensive that her former client's:
(Hr. Tr. Doc. No. 211, PageID 5028-29.)
Chew's counsel admits that there is a flat contradiction between Mr. Chew's and Ms. Flagg's testimony on this point and that no other person testified on it so "this Court must decide whether to believe Mr. Chew or Ms. Flagg." (Post-Hearing Trial Brief, Doc. No. 217, PageID 5323.) This precedes an argument why the Court should believe Chew based on other facts which counsel believe undercut Ms. Flagg's testimony. Id. at PageID 5323-24. Nothing intrinsic to their testimony on this particular question is relied on, but Ms. Flagg's is intrinsically more believable. She testifies that what she did here is consistent with her usual practice in criminal cases — giving the client advice about testifying, but not trying to make the decision on her own. She testified about having had the discussion with Chew many times during the course of the representation, which seems more likely than that it would have been discussed only once.
Finally, of course, her advice was wise. Chew believed he could be asked about his prior conviction on direct and this would "take the sting out of it." In the Court's view, that is either self-serving hindsight or, if it was his view all along, naïve. It is not a prior conviction for shoplifting or some other minor dishonesty matter. Instead, it was a prior felony fraud conviction related to his involvement in the mortgage business. It is because prior convictions are so telling with a jury that the law excludes them unless a defendant voluntarily takes the stand. The Court feels virtually certain that the prior conviction would have made the jury more likely to convict. Mr. Scaccia rendered an opinion to the contrary, but his opinion on the matter is very unpersuasive to the Court given his own disciplinary difficulties.
The trial record shows no protest by Chew personally against his not being allowed to testify. The record is therefore as consistent with his having acquiesced in Ms. Flagg's advice as being somehow prevented from testifying.
The Magistrate Judge finds that Ms. Flagg did not prevent Chew from testifying at trial and Claim Eight is therefore without merit.
As phrased in the Motion to Vacate, Claim Seven is that "[t]hese errors collectively and individually show that Ms. Flagg's representation of Mr. Chew fell below the objective standard for basic, competent representation." (Doc. No. 180, PageID 3902.) In the Post-Hearing Brief, Chew argues "Trial counsel's individual and cumulative errors were prejudicial. Even if this Court could find legitimate reasons justifying each and every one of Ms. Flagg's actions, they collectively show that Ms. Flagg had no reasonable strategy for how to defend Mr. Chew." (Post-Hearing Trial Brief, Doc. No. 217, PageID 5325.)
In deciding an ineffective assistance of trial counsel claim, a court must weigh cumulatively the prejudice flowing from discrete failures to perform competently. "[E]xamining an ineffective assistance of counsel claim requires the court to consider `the combined effect of all acts of counsel found to be constitutionally deficient, in light of the totality of the evidence in the case.'" United States v. Dado, 759 F.3d 550, 563 (6th Cir. 2014), quoting Lundgren v. Mitchell, 440 F.3d 754, 770 (6th Cir. 2006); accord, Stewart v. Wolfenbarger, 468 F.3d 338, 361 (6th Cir. 2004); Mackey v. Russell, 2005 U.S. App. LEXIS 16933 (6th Cir. 2005); Bays v. Warden, 2012 U.S. Dist. LEXIS 182608 (S.D. Ohio 2012)(Merz, M.J.)
But Chew seems to be arguing something additional, to wit, that individual mistakes of counsel, while not in themselves constitutionally deficient performances, can be accumulated to make a deficient performance on the case considered as a whole (See Post-Hearing Brief, Doc. No. 217, PageID 5326). However, that argument is interwoven with the legally correct claim that prejudice must be weighed by considering the "totality of the evidence." Id., citing Higgins v. Renico, 470 F.3d 624, 634 (6th Cir. 2006).
Chew also relies on Stouffer v. Reynolds, 168 F.3d 1155 (10th Cir. 1999). This was a capital case in which the Petitioner alleged a number of specific instances where his counsels' conduct was said to fall below an objective standard of reasonableness. The Tenth Circuit did suggest that the individual failures of petitioner's counsel might cumulatively amount to a viable Strickland violation, to wit, "a fundamental lack of formulation and direction in presenting a coherent defense." Id. at 1164. It left that determination in the first instance to the district court, to whom the case was remanded for an evidentiary hearing under pre-AEDPA standards.
Stouffer comes closest of the cited cases to supporting Chew's "deficient performance as a whole" theory, but he cites no Sixth Circuit authority for that proposition. Stouffer is distinguishable because it is a capital case in which the appellate courts have insisted on much more diligence by trial counsel than in non-capital cases, as Stouffer itself recognizes. 168 F.3d at 1168, citing Lockett v. Ohio, 438 U.S. 586 (1978).
Assuming Stouffer states the law as the Sixth Circuit would find it to be, Ms. Flagg did not lack a coherent theory. It was to create reasonable doubt in the jury's mind that Chew intended to defraud anyone since he was participating in an industry that was, at the time, very loose about representations and required documentation. Chew's present counsel admits she tried hard to put Chew's behavior in a context the jury would understand and accept by analogizing it to the conduct shown in the television series Flip This House.
Attorney Flagg provided constitutionally deficient performance in her failure to properly subpoena fact witnesses, but the failure did not prejudice Chew because most of the witnesses were called by the Government and the ones who did not appear were readily impeachable or Chew has failed to show what useful evidence they would have given. As to the balance of Chew's claims of deficient performance, he has failed to persuade the Court.
Accordingly, it is respectfully recommended that the § 2255 Motion be DENIED. Because reasonable jurists would not disagree with this conclusion, Petitioner should be denied a certificate of appealability and the Court should certify to the Sixth Circuit that any appeal would be objectively frivolous and therefore should not be permitted to proceed in forma pauperis.
