RICHARD H. KYLE, District Judge.
In 2009, following a four-week trial and a week of deliberations, a jury convicted Defendant Thomas Joseph Petters of 20 counts of fraud, conspiracy, and money laundering, concluding he had spearheaded a massive Ponzi scheme for nearly two decades. This Court later sentenced him to 50 years' imprisonment. He appealed, and the Eighth Circuit affirmed both his conviction and sentence; his subsequent petition for a writ of certiorari was denied by the United States Supreme Court.
Staring into an abyss of nearly 15,000 days of incarceration, Petters has tried to pull off one final con. He now seeks relief from this Court under 28 U.S.C. § 2255, arguing that his trial lawyers — all three of them — failed to inform him of an alleged Government plea offer that would have capped his sentence at 30 years. His Motion has been fully briefed, the Court held an evidentiary hearing on October 23, 2013, at which Petters testified, and the parties have now submitted post-hearing memoranda. The following constitutes the Court's findings of fact and conclusions of law and explains why the Motion will be denied.
The factual background underlying Petters's crimes is only marginally relevant and need not be repeated in detail here. See United States v. Petters, 663 F.3d 375 (8th Cir.2011). Suffice it to say, law-enforcement officers executed search warrants at his businesses on September 24, 2008, after an insider went to the FBI to report that he was running a multi-billion-dollar Ponzi scheme. Approximately one week later, Petters was charged by criminal complaint with fraud and related crimes and arrested. The complaint alleged that billions of dollars had been lost in the scheme; accordingly, the United States Sentencing Guidelines suggested a very substantial sentence, possibly including life imprisonment, if Petters were convicted of the crimes charged.
Petters retained counsel quickly following execution of the search warrants, employing the services of attorney Jon Hopeman, a seasoned criminal-defense lawyer who spent more than a decade as an Assistant United States Attorney in this District. Hopeman was assisted initially by a partner at his firm, Eric Riensche, and later by attorney Paul Engh, another highly experienced criminal defense lawyer in the Twin Cities.
On October 5, 2008, Assistant United States Attorney John Marti spoke with Hopeman by telephone to discuss the case. It is undisputed that during their conversation, Marti informed Hopeman the Government was willing to agree to a sentence capped at 30 years if Petters would plead guilty to some unspecified charges. This (so-called) offer was never reduced to writing, nor was there any discussion regarding the factual basis for a guilty plea. Marti later reiterated the proposed 30-year sentencing cap at a face-to-face meeting with Hopeman on December 17, 2008, approximately two weeks after Petters was indicted, and at other times before trial commenced in October 2009.
Petters now contends that his lawyers' failure to communicate the Government's 30-year sentencing cap constituted ineffective assistance of counsel, entitling him to relief from the 50-year sentence imposed by the Court.
In order to obtain relief under 28 U.S.C. § 2255, a federal prisoner must show that his "sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack." A motion under § 2255 "may not do service for an appeal." United States v. Frady, 456 U.S. 152, 165, 102 S.Ct. 1584, 71 L.Ed.2d 816 (1982). Rather, relief "is reserved for transgressions of constitutional rights and for a narrow range of injuries that could not have been raised on direct appeal and, if uncorrected, would result in a complete miscarriage of justice." United States v. Apfel, 97 F.3d 1074, 1076 (8th Cir.1996).
The Sixth Amendment to the United States Constitution guarantees criminal defendants the right to effective assistance of counsel, e.g., Chesney v. United States, 367 F.3d 1055, 1058 (8th Cir.2004), and generally speaking, allegations that trial counsel were ineffective fall within the "narrow range" of matters that may be raised in a § 2255 proceeding. See, e.g., United States v. McAdory, 501 F.3d 868, 872 (8th Cir.2007). Such claims are governed by the two-part test enunciated in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), under which a defendant must show (1) his attorney's performance was deficient and (2) the deficiency prejudiced him. Id. at 687, 104 S.Ct. 2052. As for the first prong, a defendant can show deficient performance only if his counsel's conduct "fell below an objective standard of reasonableness." Id. at 688, 104 S.Ct. 2052. As for the second prong, a defendant must establish "a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S.Ct. 2052. The defendant bears the burden of proof on each issue. Id. at 687, 104 S.Ct. 2052.
The right to effective assistance of counsel extends to plea negotiations, see, e.g., Hill v. Lockhart, 474 U.S. 52, 57, 106 S.Ct. 366, 88 L.Ed.2d 203 (1985), and requires counsel "to communicate formal offers from the prosecution to accept a plea on terms and conditions that may be favorable to the accused." Missouri v. Frye, ___ U.S. ___, 132 S.Ct. 1399, 1408-09, 182 L.Ed.2d 379 (2012) (citations omitted). The failure to communicate a formal plea offer before it expires satisfies Strickland's "deficient performance" prong. Id. at 1409. But Strickland also requires prejudice, and "[t]o show prejudice from
Petters's argument rests upon three legs: (1) the Government extended him a formal plea offer; (2) defense counsel failed to communicate that offer before trial; and (3) he was prejudiced because he would have accepted the offer and pleaded guilty, thereby receiving (at most) a 30-year sentence. All three legs of Petters's argument must pass muster in order for him to be entitled to relief, yet for the reasons that follow, none has merit.
In Frye, the Supreme Court cautioned that allegations of uncommunicated plea offers are easily fabricated after-the-fact. 132 S.Ct. at 1408-09. The Court emphasized, therefore, that ineffective assistance may arise only when formal plea offers have not been communicated to defendants. "[T]he fact of a formal offer means that its terms and its processing can be documented so that what took place in the negotiation process becomes more clear if some later inquiry turns on the conduct of earlier pretrial negotiations." Id. at 1409.
Here, there was no written offer from the Government, but rather only oral communications between counsel. While no hard-and-fast rule exists, Frye made clear that the presence of a writing is a crucial fact when determining whether a formal plea offer has been tendered by the Government. See also, e.g., Davidson v. United States, No. 4:11CV1370, 2013 WL 1946206, at *5 (E.D.Mo. May 9, 2013) (finding no formal plea offer "in light of the absence of any documentation of this alleged deal").
Moreover, the only "term" of the so-called "offer" was a 30-year sentencing cap. There was no discussion of the charges to which Petters would plead guilty,
The Supreme Court has recognized that plea agreements "are essentially contracts." Puckett v. United States, 556 U.S. 129, 137, 129 S.Ct. 1423, 173 L.Ed.2d 266 (2009). And in order for a contractual offer to exist, it must contain "sufficiently definite terms to enable [a] fact-finder to interpret and apply them." Neb. Beef, Ltd. v. Wells Fargo Bus. Credit, Inc., 470 F.3d 1249, 1251 (8th Cir.2006). In the absence of any discussion of the charges to which Petters would acknowledge guilt, the factual basis for a plea, or restitution or forfeiture issues, the terms here were not sufficiently definite to constitute a "formal plea offer." See, e.g., Merzbacher v. Shearin, 706 F.3d 356, 369-70 (4th Cir. 2013) (where prosecution's offer "finalized only one leg of a putative plea agreement, the length of sentence[,] and did not finalize the other legs," no formal plea offer was made; reversing grant of habeas relief for ineffective assistance due to failure to communicate offer); Fanaro v. Pineda, No. 2:10-CV-1002, 2013 WL 6175620, at *5, *12 (S.D.Ohio Nov. 22, 2013) (Report &
Petters directs the Court's attention to two cases in an attempt to show the Government tendered a formal plea offer here. Neither is persuasive.
He first cites Wanatee v. Ault, 101 F.Supp.2d 1189 (N.D.Iowa 2000). (Def. Reply Mem. (Doc. No. 597) at 8-10.) There, the court did, in fact, find that an oral offer allowing the defendant to plead guilty to a lesser charge was a "formal plea offer." But Wanatee is distinguishable from the circumstances here for two key reasons. First, unlike in this case, the specific charge to which the defendant would plead guilty (second-degree murder) was agreed to by counsel. 101 F.Supp.2d at 1202. As noted above, "agreement on the charges to which the defendant will plead guilty" is a key factor when determining whether a "formal plea offer" was made. Waters, 2013 WL 3949092, at *8. Second, and more importantly, the prosecution in Wanatee implicitly conceded that a formal plea offer had been extended to the defendant. 101 F.Supp.2d at 1202 (noting the prosecution had nowhere "object[ed] to the existence of a plea offer") (emphasis in original). Obviously, that is not true here.
The second case Petters cites is United States v. Strother, 509 Fed.Appx. 571 (8th Cir.2013) (per curiam). (Def. Post-Hr'g Mem. (Doc. No. 626) at 2.) There, the Assistant United States Attorney (AUSA) and defense counsel had "occasionally discussed whether Strother would plead guilty," and in response to a request, the AUSA e-mailed defense counsel his estimate of Strother's sentencing guidelines if Strother pleaded guilty. 509 Fed.Appx. at 573. Strother later proceeded to trial and was convicted; he then sought habeas relief, arguing his attorney had failed to communicate the AUSA's "offer" to him. The district court rejected that assertion after concluding that the "offer" was, in fact, made known to him, and the Eighth Circuit affirmed. According to Petters, however, the Eighth Circuit "seem[s] to have accepted that the Government's cursory e-mail constituted a formal offer." (Def. Post-Hr'g Mem. (Doc. No. 626) at 2.)
Petters is wrong. Strother was based entirely on the fact that the AUSA's e-mail had been disclosed to the defendant. The Eighth Circuit expressly declined to decide whether the e-mail was, in fact, a "formal plea offer" under Frye. 509 Fed.Appx. at 575 n. 2 ("We assume without deciding that the ... e-mail constituted a formal plea offer.").
Even if the Government's proposal of a 30-year sentencing cap constituted a "formal plea offer," the evidence conclusively establishes that counsel repeatedly
At the outset, it is noteworthy that the primary evidentiary support for Petters's claim is his own self-serving testimony. But in the Court's view that testimony is entitled to no weight; for the reasons that follow, the Court concludes that Petters is simply lying in a desperate attempt to save his own skin. The Court is not so easily fooled.
As noted above, Petters first averred, in an Affidavit filed with his Motion, that "at no time during the pretrial, trial, presentencing or sentencing stages of my case did Mr. Hopeman communicate the Government's offer to me." (Petters Aff. (Doc. No. 579-6) ¶ 3.) He claimed, instead, that he found out about the (alleged) offer only "during the pendency of [his] direct appeal." (Id. ¶ 2.) Yet, he contradicted himself in an Affidavit filed with his Reply Memorandum, barely two months later, in which he averred that he was "made aware of [the] offer ... of a 30-year cap ... immediately following [his] trial and conviction." (Petters Aff. (Doc. No. 597-5) ¶ 3 (emphasis added); see also id. ("After the verdict was read and entered, I was taken to a holding cell by the U.S. Marshalls [sic]. Mr. Hopeman came to visit me in the holding cell and stated, `Well, we had to go to trial [as] we could only get you a 30-year minimum deal.'").) This contradiction provides reason enough for the Court to conclude Petters is dissembling, but the record contains far more to bolster that conclusion.
Most compelling are the consistent, forceful assertions of all of Petters's attorneys that they repeatedly communicated the proposed 30-year cap to him:
Each attorney testified consistently at the evidentiary hearing, and the Court was able to observe their demeanor and appearance in the courtroom. The Court finds their testimony was both sincere and credible. It is also corroborated by the copious notes and memoranda prepared by Hopeman. (See, e.g., Hopeman Decl. (Doc. No. 591-1) ¶ 44 & Ex. 15 (agenda for 12/12/08 meeting with Petters included "Conv. w. John Marti" and "Plea agreement"); id. ¶ 52 & Ex. 18 (describing 7/6/09 meeting with Petters: "discussion with Marti regarding potential plea deal discussed").)
More importantly, as Hopeman noted in his Declaration, there simply would have been no "ethical, legal, tactical, or practical reason not to communicate" the Government's alleged "offer" to Petters. (Id. ¶ 87.) Nor is there any obvious (or rational) reason for Hopeman to have lied in the contemporaneous notes he prepared of his meetings with Petters. And it would strain logic to the extreme to conclude that well-versed criminal defense lawyers would ignore their long-established ethical obligations and keep Petters out of the loop. See, e.g., Minn. R. Prof'l Conduct 1.4, cmt. 2 ("[A] lawyer who receives from opposing counsel ... a proffered plea bargain in a criminal case must promptly inform the client of its substance.").
The foregoing covers mere snippets of Petters's time on the witness stand, but it undergirds an inescapable truth: his testimony is unworthy of any credence. In the Court's view, there is simply no reason to believe his claim that his lawyers never informed him of the Government's proposed 30-year sentencing cap before trial. Indeed, the only believable portions of his testimony at the hearing were his admissions that he is guilty of the crimes for which he was convicted, lied to thousands of people over more than a decade while orchestrating a massive Ponzi scheme, and then lied repeatedly to this Court at trial while under oath — in the clear hope of avoiding his just desserts.
Besides his own testimony, Petters attempts to buttress his claim with two additional pieces of evidence. Neither aids his cause, however.
The first is a statement contained in a memorandum drafted by Hopeman in January 2009. There, Hopeman described a meeting with Petters on December 10, 2008, at which he informed Petters "that we had received no plea offer from the government, despite the fact that some weeks ago, after [a] November proffer session, John Marti told me that he would be making an offer." (Doc. No. 579-3.) Petters argues this clearly shows Hopeman never mentioned the 30-year cap, but he asks the Court to cross a bridge too far by taking this statement out of context, ignoring the clause "after [a] November proffer session." In the Court's view, the only fair reading of this statement is that following a November meeting with the Government, Hopeman had expected, but had not received, a better offer than the 30-year cap the Government had already suggested. (See Hopeman Decl. (Doc. No. 591-1) ¶ 43 ("I repeatedly discussed the [G]overnment's proposed 30-year cap of imprisonment with Mr. Petters [and] then tried to get a better deal from the [G]overnment in November 2008. I was unsuccessful; even though I understood [the Government]
The second piece of evidence is an Affidavit from Shauna Kieffer, a young attorney who took interest in Petters's case shortly after being introduced to his brother through a coworker. According to her Affidavit, Kieffer had lunch with Hopeman in June 2012, nearly three years after Petters's trial, at which time he informed her "something to the effect of '30 years wasn't really an offer,'" so he "did not communicate it to [] Petters." (Kieffer Aff. (Doc. No. 579-5) ¶ 4.)
Suffice it to say, Kieffer's testimony at the hearing scuttles Petters's reliance on this statement. Kieffer testified, credibly in the Court's view, that she had misunderstood what Hopeman had told her: upon reviewing his files, it became clear to her that what he meant was "yes, he met with John Marti; and, yes, he thought the 30-year offer was ridiculous; and that he wouldn't tell [Petters] to plea to that offer. But [he did not] say that he didn't communicate that offer." (10/23/13 Hr'g Tr. at 137 (emphases added).)
For all of these reasons, the Court rejects Petters's claim that he was not informed of the Government's "offer" until after his trial had concluded.
Even assuming arguendo the proposed 30-year sentencing cap had been a "formal plea offer" and that it was not communicated, Petters still would not be entitled to relief. And this is because he cannot show "prejudice" under Strickland, as he has failed to "demonstrate a reasonable probability [he] would have accepted the ... offer" and pleaded guilty. Frye, 132 S.Ct. at 1409. Indeed, this final "leg" of Petters's argument is perhaps the most problematic for him, because he has repeatedly attempted to avoid ownership of the massive fraud he spearheaded.
Before the Court may accept a guilty plea from a defendant, it must find there exists a factual basis for the plea. See Fed.R. Crim.P. 11(b)(3). Here, that would have required Petters to acknowledge that he acted with intent to defraud and/or conspired with others to do so. But Petters maintained his innocence through trial and testified at length before the jury that he was completely unaware of the fraud taking place around him. He continued pressing this claim long after he was convicted, including in media interviews from prison in 2012 in which he forcefully denied knowingly defrauding anyone. (See Doc. No. 591-5 through 591-7.) As set forth above, Petters even attempted to evade responsibility at the evidentiary hearing, asserting that he would "tell you today that [he] most definitely did not intend to defraud anybody." (10/23/13 Hr'g Tr. at 74.) Only after the Government made clear that he could not obtain relief without acknowledging his guilt did he finally change his tune. Hence, the Court simply does not believe he would
Hopeman's notes paint the same picture. Though they show a man vacillating between defiance and resignation, they repeatedly indicate that Petters would not accept responsibility for his crimes. This is perhaps best summarized in a single paragraph in Hopeman's Declaration:
(Doc. No. 591-1 ¶ 17 (emphasis added); accord, e.g., id. ¶¶ 26-27, 31-32, 37, 57, 69.) Moreover, even during those occasional "interludes" in which Petters expressed some willingness to plead guilty, he indicated he would do so only in exchange for a term of imprisonment no greater than 20 years. (See supra at 14 & note 3.) There is no reason to believe he would have taken the Government's 30-year deal.
Petters's assertions, in his Affidavit and at the evidentiary hearing, that he would have accepted a plea offer do not change the calculus. In the Eighth Circuit, in order to obtain relief for ineffective assistance, a defendant "must present some credible, nonconclusory evidence that he would have pled guilty had he been [] advised" of a potential plea agreement. Engelen v. United States, 68 F.3d 238, 241 (8th Cir.1995). For the reasons set forth above, the record here is devoid of such evidence. See also, e.g., Sanders, 341 F.3d at 723 (court properly rejects ineffective-assistance claim based on assertion defendant would have accepted government's plea offer where it is "inherently incredible in light of the record").
For all of these reasons, Petters's ineffective-assistance claim fails. He cannot show counsel rendered deficient performance under Strickland because he has failed to demonstrate either that a formal plea offer was made or that the so-called offer was not communicated to him. And he cannot show prejudice under Strickland because he has failed to demonstrate that he would have accepted the alleged deal before trial.
In addition to ineffective assistance, Petters also contends in his Motion that his 50-year sentence violated the Eighth Amendment's prohibition on cruel and unusual punishment because it was "disproportionate to the crime[s] of conviction."
Petters is indeed correct that the Constitution's prohibition on cruel and unusual punishments includes a "narrow proportionality principle" that "prohibits... sentences that are disproportionate to the crime committed." Ewing v. California, 538 U.S. 11, 20, 22, 123 S.Ct. 1179, 155 L.Ed.2d 108 (2003). But as noted in Harmelin v. Michigan, "[t]he Eighth Amendment does not require strict proportionality between crime and sentence. Rather, it forbids only extreme sentences that are grossly disproportionate to the crime." 501 U.S. 957, 1001, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991) (Kennedy, J., concurring in part and concurring in the judgment) (emphases added) (internal quotation marks and citations omitted); accord Ewing, 538 U.S. at 23-24, 123 S.Ct. 1179 (adopting Justice Kennedy's formulation of proportionality). Hence, successful challenges to the proportionality of particular sentences are "exceedingly rare." United States v. Weis, 487 F.3d 1148, 1153 (8th Cir.2007) (quoting Harmelin, 501 U.S. at 1001, 111 S.Ct. 2680). This is not one such "exceedingly rare" case.
In Harmelin, the Supreme Court affirmed a life sentence without parole for a first-time offender possessing less than one kilogram of cocaine. If a life sentence was appropriate in Harmelin, it is difficult to conceive how the sentence imposed in this case was "grossly disproportionate." Petters was convicted of 20 separate felony offenses. The scale of his crimes was enormous; the Ponzi scheme, which he conceived and spearheaded, resulted in massive financial losses by hundreds if not thousands of victims, some of whom testified they lost every penny they had. Countless lives were ruined or substantially disrupted. The sheer size and scope of the fraud and Petters's role therein resulted in an advisory Sentencing Guidelines range of life imprisonment, which was necessarily reduced to 335 years in prison, the sum of the statutory maximum penalties for his crimes. Petters, of course, received far less. The Court perceives no constitutional infirmity under these facts.
Engaging in a purely mathematical exercise, Petters points to the sentences imposed in other fraud causes, utilizing a ratio of the losses there and here to argue his sentence was unlawful. (See, e.g., Def. Post-Hr'g Mem. (Doc. No. 626) at 10 (discussing Allen Stanford: "Stanford was ordered to serve 110 years in prison, or more than double Defendant Petters' sentence[,] even though the loss [there was] seven times greater than the... loss in the instant case. Defendant Petters' proportionate sentence, in comparison, would be approximately 15 and
For these reasons, Petters's claims fail. The Court anticipates, however, that he will seek appellate review of this Order. To appeal a final order in a proceeding under § 2255, a defendant must obtain a Certificate of Appealability. 28 U.S.C. § 2253(c)(1)(B). A district court cannot grant a Certificate of Appealability unless the defendant "has made a substantial showing of the denial of a constitutional right." Id. § 2253(c)(2) (emphasis added); accord, e.g., Williams v. United States, 452 F.3d 1009, 1014 (8th Cir.2006). A Certificate of Appealability will not issue simply because an appeal might be pursued in good faith, raising non-frivolous issues. See Kramer v. Kemna, 21 F.3d 305, 307 (8th Cir.1994) ("Good faith and lack of frivolousness, without more, do not serve as a sufficient bases for issuance of a certificate under 28 U.S.C. § 2253."). Rather, the movant must show that the issues are "debatable among reasonable jurists," that different courts "could resolve the issues differently," or that the issues otherwise "deserve further proceedings." Cox v. Norris, 133 F.3d 565, 569 (8th Cir.1997).
The Court concludes that Petters cannot meet this exacting standard here. His claims have been fully addressed and lack merit; the Court does not believe they are "debatable among reasonable jurists." Id. at 568. Petters has not shown sufficient reason to believe that any other court — including the Eighth Circuit — would decide this case any differently than it was decided here. And, he has not identified, and the Court cannot independently discern, anything novel, noteworthy, or worrisome about his case warranting appellate review.
Like so many before it, this great American tragedy, in which money was lost, lives were ruined, and more than a dozen people have been sent to prison, has come to an end. Petters's last-ditch attempt to escape just punishment for his crimes does not hold water; he received constitutionally effective counsel and his sentence was not unlawful. He is entitled to neither relief nor sympathy from this Court.
Based on the foregoing, and all the files, records, and proceedings herein,
