DEBORAH K. CHASANOW, District Judge.
Presently pending and ready for resolution is a motion to vacate sentence filed by Petitioner Asem Elgawhary ("Petitioner"). (ECF No. 87). For the following reasons, the motion to vacate will be denied.
Petitioner was an employee of Bechtel Corporation ("Bechtel"), a global corporation involved in engineering, construction, and project management. In 1993, Bechtel established a joint venture with the Egyptian government's electrical company, Egyptian Electricity Holding Company ("EEHC"), called Power Generation Engineering and Services Company ("PGESCo"). EEHC subcontracted with private companies to perform services on its behalf and PGESCo provided technical and management assistance in the engineering, design and construction of power projects, including for EEHC. PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform work for EEHC. From 1996 to 2011, Petitioner was "assigned by Bechtel to be the General Manager at PGESCo. During that time, . . . [Petitioner] was employed by both Bechtel and PGESCo." (ECF No. 64-1, at 1). His responsibilities included oversight of the competitive bidding process and assisting in selecting companies for subcontracting work. He had access to information about the bidding process and access to key decision makers at EEHC who had final responsibility for selecting the subcontractors.
From 2003 until 2011, various companies paid Petitioner money "for the purpose of attempting to secure a competitive and unfair advantage in the bidding process." (ECF No. 64-1, at 3). Petitioner received over $5,000,000 in payments. Petitioner concealed all information about these payments from his employers. Petitioner also conspired to move the money he obtained from these payments through financial institutions to "disguise the nature and source of the funds." (Id. at 5). To cover-up the source of the payments further, Petitioner told employees of the Internal Revenue Service that the money he deposited into his savings accounts were from foreign relatives and not from companies bidding on contracts with his employers.
On December 4, 2014, Petitioner pled guilty to mail fraud, conspiracy to launder money, and interference with the administration of the Internal Revenue laws and was sentenced to 42 months imprisonment, followed by one year of supervised release.
On June 26, 2017, Petitioner filed a motion to vacate sentence. Petitioner argued that after the decision of the Supreme Court of the United States in McDonnell v. United States, 136 S.Ct. 2355 (2016), the conduct Petitioner pled guilty to no longer constituted a crime. (ECF No. 87, at 8). Accordingly, Petitioner challenged the validity of his plea. The Government responded, (ECF No. 98), and Petitioner replied. (ECF No. 101).
An issue may only be raised in a motion to vacate pursuant to 28 U.S.C. § 2255 if it has not been procedurally defaulted. If a claim could have been raised on direct appeal, and was not, the general rule is that "claims not raised on direct appeal may not be raised on collateral review[.]" Massaro v. United States, 538 U.S. 500, 504 (2003). "The Supreme Court has recognized an equitable exception to the bar, however, when a habeas applicant can demonstrate cause and prejudice[.]" United States v. Pettiford, 612 F.3d 270, 280 (4
Petitioner's motion was filed well after the normal one year period for filing, but he claims that the motion is timely because it was filed within a year of the new rule of law announced in McDonnell. The Government concedes timeliness, but it argues that the motion to vacate is procedurally barred because Petitioner failed to raise the issue on direct appeal.
Failing to raise an argument on direct appeal is excused, and the procedural bar removed, when, at the time of the plea, the argument was not reasonably available. An argument is reasonably available when counsel would have known of the issue and could advise whether a client's interest would be best served by making the argument or not. Reed v. Ross, 468 U.S. 1, 14 (1984). If a petitioner makes a "tactical decision to forgo a procedural opportunity — for instance an opportunity to object at trial or to raise an issue on appeal," then the petitioner cannot later show "cause" to excuse the procedural default. Id.
In Bousley v. United States, 523 U.S. 614 (1998), a petitioner pled guilty to "using" a firearm in violation of 18 U.S.C. § 924(c)(1). After the guilty plea, the Supreme Court narrowed the conduct included under the definition of "use," and the petitioner filed a petition for a writ of habeas corpus arguing that his actions no longer fit the definition of "use." The petitioner argued that "the legal basis for his claim was not reasonably available to counsel at the time his plea was entered" and therefore that his failure to raise the issue on appeal should be excused. Id. at 622. The Court concluded the argument was reasonably available because "at the time of [the] petitioner's plea, the Federal Reporters were replete with cases involving challenges to the notion that `use' is synonymous with mere `possession.'" Id. at 622-23.
Here, Petitioner pled guilty to one count of mail fraud in violation of 18 U.S.C. § 1341. Petitioner contends that the argument that the conduct the Government identified did not constitute official acts performed in exchange for specific benefits was not reasonably available. (ECF No. 87-1, at 10). This argument, however, if applicable, nevertheless was readily available.
In United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 414 (1999), the Supreme Court held that "to establish a violation of 18 U.S.C. § 201(c)(1)(A), the Government must prove a link between a thing of value conferred upon a public official and a specific `official act.'" In fact, the Court relied on Sun-Diamond in rejecting the Government's argument in McDonnell. 136 S.Ct. at 2370. Petitioner's argument is essentially that his plea did not fulfill the Court's holding in Sun-Diamond. It fails because, "at the time of [P]etitioner's plea, the Federal Reporters [and online legal databases] were replete with cases involving challenges to the notion that" actions taken by public officials were "official acts" done in exchange for benefits. Bousley v. United States, 523 U.S. 614, 623 (1998); see, e.g., United States v. Verrusio, 762 F.3d 1, 11-15 (D.C. Cir. 2014); United States v. Abbey, 452 F.Supp.2d 766, 769 (E.D.Mich. 2006). Petitioner has not alleged ineffective assistance of counsel, and it would seem competent counsel would have advised Petitioner on the advantages and disadvantages of raising such an argument at trial and on appeal.
Moreover, at the time of the plea, the test the United States Court of Appeals for the Fourth Circuit had established for determining what qualified as honest services fraud required a case-by-case determination. According to the Fourth Circuit, although "every act within the range of official duty c[ame] within the purview of an `official act'," the statute "d[id] not encompass every action taken in one's official capacity[.]" United States v. Jefferson, 674 F.3d 332, 356 (4
Petitioner misunderstands the test for "cause" when he states that the decision in McDonnell was an "unanticipated" and "major change in the legal landscape" excusing his failure to raise the argument. (ECF No. 101, at 4). Even if true, the inquiry for "cause" to excuse a default focuses on arguments, not decisions. The question is not about the novelty or importance of the Supreme Court's decision but rather whether the argument that led to that decision was novel. In the context of an honest services case, the argument that the actions were not "official actions" done in exchange for a benefit was commonplace and routine. Sometimes the argument prevailed. See, e.g., Valdes v. United States, 457 F.3d 1319 (D.C. Cir. 2007) (en banc). Sometimes it did not. See, e.g., United States v. McDonough, 727 F.3d 143 (1
Petitioner cites to McDonnell and United States v. Silver, 864 F.3d 102 (2
Petitioner did not make the argument and chose instead to plead guilty pursuant to a plea agreement submitted pursuant to Fed.R.Crim.P. 11 (c)(1)(C). The grand jury had returned an eight-count indictment against Petitioner which included four counts of mail fraud, two counts of wire fraud, one count of conspiracy to commit money laundering, and one count of interfering with the administration of the Internal Revenue laws. (ECF No. 18). Petitioner and the Government negotiated an agreement. As part of the agreement, Petitioner benefited from a reduced sentence. The agreement included a carefully crafted statement of facts designed to admit the minimum conduct necessary to establish guilt for the charged crime.
Accordingly, Petitioner has not shown cause to excuse his failure to raise the issue at trial and/or on appeal.
The Supreme Court has held that "actual innocence, if proved, serves as a gateway through which a petitioner may pass" to raise arguments that would otherwise be procedurally barred. McQuiggin v. Perkins, 133 S.Ct. 1924, 1928 (2013). However, "`actual innocence' means factual innocence, not mere legal insufficiency." Bousley v. United States, 523 U.S. 614, 623 (1998)(citation omitted). Successful actual-innocence gateway pleas are "rare," and "a petitioner does not meet the threshold requirement unless he persuades the district court that, in light of the new evidence, no juror, acting reasonably, would have voted to find him guilty beyond a reasonable doubt." McQuiggin, 133 S.Ct. at 1928.
Petitioner asserts that even if he cannot show cause, the court can review his petition because he has established an actual innocence gateway. (ECF No. 101, at 14). To create an actual innocence gateway, a petitioner must show that "in light of new evidence it is more likely than not that no reasonable juror would find him guilty beyond a reasonable doubt." House v. Bell, 547 U.S. 518, 537 (2006) (emphasis added). "Without any new evidence of innocence, even the existence of a . . . meritorious constitutional violation is not in itself sufficient to establish a miscarriage of justice that would allow a habeas court to reach the merits of a barred claim." Schlup v. Delo, 513 U.S. 298, 316 (1995). Here, Petitioner has not brought forward any new evidence to suggest innocence and therefore cannot establish an actual innocence gateway.
Petitioner's motion to vacate his sentence is procedurally barred.
Even if Petitioner's motion was not procedurally barred, it would still be denied.
Petitioner asserts:
(ECF No. 87-1, at 8). To conclude McDonnell applies, Petitioner assumes that he was exclusively a public official and that honest services fraud can only be defined in reference to the federal bribery statute, 18 U.S.C. § 201. Neither of these assumptions is correct. Petitioner was a private employee, and bribery has more than one possible definition.
Petitioner's argument first creates a false dichotomy in which a person is either a private or public employee, but Petitioner worked for both a private corporation and a public-private joint venture. He was — at least — an employee of a private corporation.
Petitioner also assumes that the Government — and the court — would have had to define honest services fraud by reference to the federal bribery statute, 18 U.S.C. § 201. (ECF No. 87-1, at 13). Section 201, however, is not the only definition of bribery. (ECF No. 87-1, at 12). In McDonnell, the government charged Governor Robert McDonnell with honest services fraud, and the parties "agreed to define honest services fraud with reference to the federal bribery statute." 136 S.Ct. at 2365. As a result, "the [g]overnment was required to prove that Governor McDonnell committed or agreed to commit an `official act in exchange for the loans and gifts from [Jonnie] Williams.'" Id. The Court interpreted "official act" to mean "mak[ing] a decision or tak[ing] an action on," id. at 2370, "a `question' or `matter' . . . similar in nature to a `cause, suit, proceeding or controversy.'" Id. at 2369.
Here, the Government did not agree that Petitioner was solely a public official. The plea agreement states on numerous occasions that he owed a duty to a private corporation. Petitioner's pre-trial motions practice emphatically stated that this was a "private-sector honest-services mail and wire fraud prosecution." (See, e.g., ECF No. 53, at 1). Petitioner's sentencing memorandum candidly acknowledges, "By accepting these payments and concealing them from his employer, Dr. Elgawhary violated his duty of honest services to Bechtel." (ECF No. 71, at 3). Moreover, the Government did not — and does not — agree that the definition of bribery under 18 U.S.C. § 201 applies. Other federal statutes supply different definitions for bribery, see, e.g., 18 U.S.C. § 666, and kickbacks, see, e.g., 41 U.S.C. §§ 8701, et seq. Accordingly, McDonnell, a case applying, the definition of § 201 bribery to a public official, does not establish that the conduct Petitioner pled guilty to is not illegal.
Petitioner pled guilty to mail fraud in violation of 18 U.S.C. §§ 1341 and 1346, conspiracy to launder money in violation of 18 U.S.C. § 1956(h), and interference with the administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212. 18 U.S.C. § 1346 prohibits schemes to defraud another person of the intangible right of honest services. Section 1346 prohibits employees from participating in a bribery or kickback scheme "in violation of a fiduciary duty." Skilling v. United States, 561 U.S. 358, 407 (2010). Where an employee "solicit[s] or accept[s] side payments from a third party in exchange for making these misrepresentations" to benefit the third party, the employee commits honest services fraud. Id. at 2010.
As found in United States v. Lusk, No. 2:15-cr-00124, 2017 WL 508589, at *4 (S.D.W.Va. Feb. 2, 2017), honest services mail fraud when analyzed expansively contains the following eight elements:
Petitioner's guilty plea established all the requisite elements of private sector honest services fraud. Petitioner was an employee at Bechtel. Petitioner "owed a duty of loyalty to Bechtel[.]" (ECF No. 64-1, at 12). Petitioner "accepted payments from the consultants representing power companies . . . for the purpose of attempting to secure a competitive and unfair advantage in the bidding process." (Id.). Petitioner concealed and misrepresented material facts. He used the mail in furtherance of the scheme. Thus, Petitioner's plea establishes his guilt for the offense of honest services mail fraud.
The Fourth Circuit recently affirmed a conviction under similar circumstances. In United States v. Pinson, 860 F.3d 152, 168-69 (4
If steering a contract constitutes public sector honest services mail fraud post-McDonnell, it also establishes private sector honest services mail fraud.
Petitioner has not demonstrated that he is being held in violation of the laws of the United States or the Constitution.
Pursuant to Rule 11(a) of the Rules Governing Proceedings under 28 U.S.C. §§ 2254 or 2255, the court is also required to issue or deny a certificate of appealability when it enters a final order adverse to the petitioner. A certificate of appealability is a "jurisdictional prerequisite" to an appeal from the court's order. United States v. Hadden, 475 F.3d 652, 659 (4
Upon its review of the record, the court finds that Petitioner does not satisfy the above standard. Accordingly, it declines to issue a certificate of appealability.
For the foregoing reasons, the motion to vacate sentence filed by Petitioner Asem Elgawhary will be denied. A separate order will follow.
