Opinion
A-20-CR-292-1-RP A-23-CV-1019-RP-ML
05-10-2024
JASON MICHAEL SCHUBERT, Petitioner v. UNITED STATES OF AMERICA, Respondent.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE:
Before the court is Petitioner Jason Michael Schubert's Motion to Vacate, Set Aside, or Correct Sentence Pursuant to 28 U.S.C. § 2255 (Dkt. 56), Schubert's Motion for Discovery (Dkt. 71), and all related briefing. After reviewing the pleadings and the relevant case law, the undersigned submits the following Report and Recommendation to the District Court.
I. Background
A. Factual Background
Jason Michael Schubert pleaded guilty to: Count One - Wire Fraud in violation of 18 U.S.C. § 1343; and Count Two - Engaging in Monetary Transaction in Criminally Derived Property in violation of 18 U.S.C. § 1957. Dkt. 5 (Plea Agmt.), Dkt. 12. From at least as early as 2012 and continuing until at least June 2018, Schubert “devised and executed a scheme to obtaining [sic] money from investors to purchase, operate, and/or invest in hotels, by means of false and fraudulent pretenses, representations, and promises.” Dkt. 5 (Plea Agmt.) ¶ 4c. He
misrepresented that investors would receive returns and profit distributions from hotel investments, and failed to create and maintain reasonable business records relating to the investments. Rather than using the money for the hotel investment activities that he represented to investors, Defendant misappropriated the money for himself by controlling relevant bank accounts and paying himself significant
“management fees” and other fees, even though Defendant had no hotel management experience. Defendant also diluted the interests of investors, without their knowledge and consent, by seeking loans from outside lenders secured by an ownership interest in hotel properties.Id. ¶ 4c. Through Schubert's fraudulent scheme, he “caused losses to investors of approximately $2,000,000.” Id. ¶ 4p.
In his Plea Agreement, Schubert waived his right to trial and his appellate rights. Id. ¶ 6b, c. He also waived his right to challenge his conviction and sentence collaterally, except he did not waive his right to collaterally challenge his sentence based on ineffective assistance of counsel. Id. ¶ 6c. He agreed to the entry of a restitution order for the full amount of the losses. Id. ¶ 6d.
Schubert's PSR stated that the investigation concluded that the total loss for Schubert's victims was at least $5,052,366.92. Dkt. 22 (PSR) at ¶ 45. Because the losses were greater than $3.5 million, but less than $9.5 million, his base offense level was increased by 18 levels. Id. ¶ 54. The PSR also determined a 2-level increase because the offense involved sophisticated laundering under U.S.S.G. § 2S1.1(b)(3) and another 2-level enhancement under U.S.S.G. § 2b1.1(b)(10). Id. ¶¶ 56, 54. All told, Schubert's total offense level was 31 and his criminal history was category I, yielding a Guideline imprisonment range of 108 motions to 135 months. Id. ¶ 108.
The District Court accepted his guilty plea on January 8, 2021, Dkt. 16, and sentenced him on May 18, 2022, Dkt. 40. Before sentencing, Schubert's trial counsel filed a Memorandum for Downward Variance, arguing for a sentence of probation rather than imprisonment, which the court reviewed before the sentencing hearing. Dkt. 36; Dkt. 49 (Sent. Tr.) at 1:18-20. Schubert did not object to the PSR. Sent. Tr. at 3:19-22. The court adopted the PSR without change but varied from the Guidelines range under 18 U.S.C. § 3553(a) and sentenced Schubert to 70 months imprisonment for both counts, to run concurrently, 3 years of supervised release, and restitution of $5,052,366.92. Dkt. 40; Dkt. 41.
Schubert filed a direct appeal, but the Fifth Circuit dismissed it on his own motion. Dkt. 54.
Schubert, through new counsel, now collaterally attacks his sentence. Dkt. 56. Couching all of his claims as ineffective assistance of counsel claims, Schubert asserts the amount of loss- and its attendant increase in offense level-is unsupported; the 2-level upward adjustment for sophisticated laundering under U.S.S.G. § 2S1.1(b)(3) was erroneous as a matter of law; the restitution amount was incorrectly calculated; and the upward adjustment for sophisticated means under U.S.S.G. § 2B1.1(b)(10) was erroneous. Id. The Government agrees that the adjustment under U.S.S.G. § 2S1.1(b)(3) was erroneous as a matter of law, Dkt. 73 at 14, but opposes all relief, Dkt. 73.
Schubert moved for discovery from the Probation Officer who prepared the PSR, which the court previously denied. Dkt. 70. Schubert also moved for discovery from his trial counsel, asserting that trial counsel may have withheld parts of his file from his new counsel. Dkt. 71.
II. Issues Presented
As stated by counsel, Schubert presents the following issues:
Claim For Relief No. 1: Schubert was denied his right to effective assistance of counsel in connection with his sentencing, as guaranteed by the sixth amendment to the constitution of the United States, by virtue of his counsel's unprofessional, deficient and prejudicial acts and omissions that collectively reflect that the total loss amount (and corresponding upward adjustment of plus 18 under USSG § 2b1.1(b)(1)(j) was erroneously calculated given application note 3(E) to USSG § 2b1.1(b)(1): both the loss amount and the manner in which it was calculated should have been objected to.
Claim For Relief No. 2: Schubert was denied his right to effective assistance of counsel in connection with his sentencing, as guaranteed by the sixth amendment to the constitution of the United States, by virtue of his counsel's unprofessional, deficient and prejudicial acts and omissions that reflect that the upward adjustment for sophisticated laundering under USSG § 2S1.1(b)(3) was erroneous as a matter of law: it should have been objected to.
Claim For Relief No. 3: Schubert was denied his right to effective assistance of counsel in connection with his sentencing, as guaranteed by the sixth amendment to the constitution of the United States, by virtue of his counsels' unprofessional, deficient and prejudicial acts and omissions that collectively reflect that the total restitution amount was erroneously calculated: it should have been objected to and a restitution hearing requested.
Claim For Relief No. 4: Schubert was denied his right to effective assistance of counsel in connection with his sentencing, as guaranteed by the sixth amendment to the constitution of the United States, by virtue of his counsel's unprofessional, deficient and prejudicial acts and omissions that reflect that the upward adjustment for sophisticated means under USSG § 2b1.1(b)(10) was erroneous: it should have been objected to.
III. Standard of Review
Under section 2255, there are generally four grounds upon which a defendant may move to vacate, set aside or correct his sentence: (1) the sentence was imposed in violation of the Constitution or laws of the United States; (2) the district court was without jurisdiction to impose the sentence; (3) the sentence imposed was in excess of the maximum authorized by law; and (4) the sentence is otherwise subject to collateral attack. 28 U.S.C. § 2255. The nature of a collateral challenge under section 2255 is extremely limited: “A defendant can challenge his conviction after it is presumed final only on issues of constitutional or jurisdictional magnitude . . . and may not raise an issue for the first time on collateral review without showing both ‘cause' for his procedural default, and ‘actual prejudice' resulting from the error.” United States v. Shaid, 937 F.2d 228, 232 (5th Cir. 1991) (quoting United States v. Frady, 456 U.S. 152, 168 (1982)). If the error is not of constitutional or jurisdictional magnitude, the movant must show that the error could not have been raised on direct appeal and would, if condoned, “result in a complete miscarriage of justice.” United States v. Smith, 32 F.3d 194, 196 (5th Cir. 1994). However, a defendant's ineffective assistance of counsel claim does create a constitutional issue and is cognizable pursuant to Section 2255. United States v. Walker, 68 F.3d 931, 934 (5th Cir. 1996).
IV. Ineffective Assistance of Counsel
The Sixth Amendment to the United States Constitution guarantees a defendant in a criminal case reasonably effective assistance of counsel. U.S. CONST. amend VI; Cuyler v. Sullivan, 446 U.S. 335, 344 (1980). To prevail on an ineffective assistance of counsel claim, a movant must satisfy the two-part test enunciated in Strickland v. Washington. 466 U.S. 668, 687 (1984). First, he must demonstrate counsel's performance fell below an objective standard of reasonableness. Id. Under this standard, counsel must “research relevant facts and law, or make an informed decision that certain avenues will not be fruitful.” United States v. Conley, 349 F.3d 837, 841 (5th Cir. 2003). The effectiveness of an attorney's representation must be gauged “on the facts of the particular case, viewed as of the time of counsel's conduct.” Strickland, 466 U.S. at 690. A court will not find ineffective assistance merely because it disagrees with counsel's trial strategy. Crane v. Johnson, 178 F.3d 309, 312 (5th Cir. 1999). Whether counsel's performance was deficient is determined by examining “the law as it existed” at the time of the representation. See id. “[C]ounsel is not ineffective for failing to raise a claim that courts in the controlling jurisdiction have repeatedly rejected . . . or even for not rais[ing] every nonfrivolous ground that might be pressed on appeal.” United States v. Fields, 565 F.3d 290, 294 (5th Cir. 2009) (internal quotations and citations omitted).
Second, movant must prove he was prejudiced by counsel's substandard performance. “[T]o prove prejudice, the defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different.” Conley, 349 F.3d at 841-42. When a movant fails to meet either requirement of the Strickland test, his ineffective assistance of counsel claim is defeated. See Belyeu v. Scott, 67 F.3d 535, 538 (5th Cir. 1995); United States v. Gaudet, 81 F.3d 585, 591-92 (5th Cir. 1996). “[A] court must indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance.” United States v. Fields, 761 F.3d 443, 453 (5th Cir. 2014) (quoting Strickland, 466 U.S. at 689)). Additionally, courts presume that counsel's “challenged action might be considered sound trial strategy.” Belyeu, 67 F.3d at 538 (citing Strickland).
“A defendant who alleges a failure to investigate on the part of his counsel must allege with specificity what the investigation would have revealed and how it would have altered the outcome of the trial.” United States v. Green, 882 F.2d 999, 1003 (5th Cir. 1989). More specifically, a defendant must “suggest with specificity what exculpatory evidence could have been uncovered by a more thorough investigation by his counsel.” Id. Further, the defendant must allege how that evidence would have helped him. Id.
V. Analysis
Before addressing Schubert's claims for relief, the undersigned first wants to address Schubert's briefing and argument as a whole. Shubert's motion is over 150 pages long and contains over 200 footnotes. His reply is around 40 pages long and contains over 30 footnotes. Most of the footnotes in both briefs are substantive.
The motion spends many, many pages describing the precise timelines of when trial counsel did or did not do something. But this background does not matter. What matters is whether there were objections at sentencing that trial counsel should have made but did not make, and whether Schubert was prejudiced by the lack of those objections.
Habeas counsel's strategy appears to be to raise so many questions regarding trial counsel's representation to force the undersigned to wonder if trial counsel was ineffective, but that strategy may have worked against Schubert here. First, this 2255 motion may have been reached sooner if Schubert's briefing had not been so verbose. Recognizing the amount of time it would take to work through well over 200 pages of briefing, the undersigned had to wait until several weeks could be spent on this motion alone. Even still, this court does not have the time or resources to adequately address each argument and rabbit trail as thoroughly as it would like. Second, while there may have been good arguments in the motion, they are lost among the sniping at trial counsel, the repeated caveats made throughout the motion, the endless explanatory footnotes, and the weaker arguments. Habeas counsel's strategy of fanning so much smoke only resulted in the undersigned seeing smoke. If there was any fire, it was unidentifiable for all the smoke.
A. Claim 2
The undersigned starts with Claim 2 because both sides agree a mistake was made. Schubert asserts trial counsel was ineffective for failing to object to the 2-level upward adjustment for sophisticated laundering under U.S.S.G. § 2S1.1(b)(3). The Government agrees that the adjustment under U.S.S.G. § 2S1.1(b)(3) was erroneous as a matter of law because Schubert was not convicted of an offense under 18 U.S.C. § 1956. Dkt. 73 at 14. The court finds Schubert's trial counsel was deficient for failing to object to this adjustment.
The court recognizes that not all failures to object to a miscalculated Guideline range constitute ineffective assistance of counsel.
[I]t is not at all uncommon for a cross-reference to be overlooked. The U.S.S.G. Manual contains so many cross-references that all involved in the calculation frequently miss them: the Probation Office, defense attorneys, prosecutors, even the district court judge. But Strickland does not dictate that missing a single cross-reference in the U.S.S.G. is so deficient that it is constitutionally deficient. And it is inconceivable that a Sixth Amendment violation occurs when counsel performs with anything less than mathematical precision in navigating a manual that routinely generates reversible plain error in our court.United States v. Valdez, 973 F.3d 396, 404 (5th Cir. 2020).
The PSR calculated the total offense level as 31, which has a Guideline range of 108 to 135 months. Without the erroneous 2-level enhancement, a total offense level of 29 results in a Guideline range of 87 to 108 months. The Government contends the error was not prejudicial because Schubert was still sentenced below the offense level 29 Guideline range. Schubert argues trial counsel's failure was prejudicial because Judge Pitman's sentence was a 28.42% downward variance from the low end of the 108-135 month range and there is no way to know that Judge Pitman would not have varied that same percentage from an 87-108 month range. Schubert argues that any increase in incarceration time is prejudicial.
“[T]o prove prejudice, the defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different.” United States v. Grammas, 376 F.3d 433, 436 (5th Cir. 2004) (quoting United States v. Conley, 349 F.3d, 837, 841-42 (5th Cir. 2003). “And, of course, ‘any amount of actual jail time has Sixth Amendment significance,' which constitutes prejudice for purposes of the Strickland test.” Id. (quoting Conley, 349 F.3d at 842); see also United States v. Franks, 230 F.3d 811, 815 (5th Cir. 2000) (finding prejudice where defendant was sentenced under Guidelines range of 70 to 87 months instead of the proper 57 to 71 months range)).
In cases where a criminal defendant is sentenced within the Guideline range, it is relatively straightforward to find prejudice. Where there is no indication-based on the record or the reasons given by the district court at sentencing-that the district court intended to impose anything other than a Guideline sentence, there is a reasonable probability that a defendant is prejudiced by miscalculations in the Guideline range. United States v. Smith, 454 Fed.Appx. 260, 262 (5th Cir. 2011) (citing Glover v. United States, 531 U.S. 198, 204 (2001); Strickland, 466 U.S. at 694).
However, it is axiomatic that post-Booker, the application of the Guidelines to a sentence is discretionary, and the court is entitled to impose a variance outside the Guidelines range. United States v. Valdez, 973 F.3d 396, 404 (5th Cir. 2020) (citing Gall v. United States, 552 U.S. 38, 4651, (2007)). The court is obligated to calculate and consult the Guidelines range but may use departures up or down from that range, or even jump the Guidelines and impose a variance if consideration of other factors so warrants. Id. In these cases, calculating prejudice is more difficult.
Schubert cites Rogers v. United States, 949 F.Supp.2d 879 (N.D. Iowa 2013), as being factually similar. There, the sentencing judge was confronted with a 2255 motion by a petitioner who had shown his counsel was ineffective for failing to object to a two-level enhancement. On the 2255 review, the sentencing judge then had to determine whether petitioner was prejudiced by this failure even though he had been sentenced well-above the Guideline range. The Government argued the judge would have varied upwards to the 120-month sentence regardless of the Guideline range. The petitioner contended that if judge had deemed 120-months appropriate based on the fact that it was approximately double the high end of the incorrect Guideline range, he was prejudiced because a sentence approximately double the high end of the correct Guideline range was 100 months. The judge stated:
I also find that, although I stated during Rogers's sentencing hearing that I would have varied up to 120 months, even if I hadn't denied acceptance of responsibility, the record also demonstrates that I was concerned about the reasonableness of an upward variance in comparison to the guideline range and the possibility of going too high when the instant offense was a fairly modest bank fraud case. Sent. Trans. at 148-149, 162. My statements indicate that a consideration of the variance in relation to the guideline range was included in my contemplation of the appropriate sentence in Rogers's case.Id. at 891-92.
In contrast, in Lee v. United States, the sentencing judge clearly explained that petitioner's sentence was not based on the advisory Guidelines. Lee v. United States, No. CIV.A. L-10-61, 2010 WL 2557725, at *3 (S.D. Tex. June 22, 2010). Instead, the sentence was based upon the § 3553 factors. Therefore, the petitioner could not show that being placed in a lower Guideline range would have resulted in a lower sentence. Without any facts to show that the sentencing judge's analysis of the § 3553 factors would have changed absent his counsel's failure, the petitioner could not show prejudice.
Schubert does concede that:
If, but only if, Judge Pitman had stated during Schubert's sentencing that “even if the guidelines have been incorrectly calculated, I would still be imposing a sentence of 70 months”[] (or words to a similar effect) could this Court potentially conclude that the incorrect guideline range of 31, versus the maximum guideline range of 29[] was not prejudicial under Strickland's second prong.Dkt. 74 at 13 (footnotes omitted).
At sentencing, Judge Pitman stated:
I will say that what anyone who appears in front of me for sentencing hears me say all the time, and that is that I do not believe that in itself, long periods of incarceration do much good. I think we over-incarcerate people, but I think that there are times when we need to send a very clear message that certain conduct will not be tolerated.
I will grant what both your lawyer and the prosecutor has indicated and that is that we do need to encourage early restitution, and I will take into consideration your attempts to do that. And as a basis on which to vary from the guideline recommendation, I think that there is some number of months that would represent what you did to these victims to send a message to you and to other people that there are consequences to it, based on your efforts -- based on what your lawyer said basically and that is that you didn't get into this from the beginning, at least to my knowledge, with the intention of doing this and that you have at least started your way to making restitution.
I am going to use those factors as a reason to vary a bit from the guidelines. What I will tell you that your conduct and your, frankly, shocking lack of self-awareness today, even today of what you did justify a sentence -- a significant sentence. I'm going to sentence you to a term of incarceration of 70 months, followed by a term of supervised release of three years.Dkt. 49 (Sent. Tr.) at 59:2-60:3. After sentencing, Judge Pitman further indicated the sentence he imposed was “otherwise outside the sentencing guideline system.” Dkt. 41 (Statement of Reasons) at 2. Based on his statements at sentencing, there is no reason to believe, other than speculation, that Judge Pitman would have imposed a different sentence if the correct Guideline range had been calculated. Accordingly, Schubert has not shown he was prejudiced by his counsel's failure to the object to the 2-level adjustment under U.S.S.G. § 2S1.1(b)(3).
The undersigned is mindful that Judge Pitman will review this Report and Recommendation and, if the undersigned's finding on this issue is wrong, can reject it.
B. Claim 1
Schubert asserts his counsel was ineffective for failing to object to the loss amount and how it was calculated. The loss amount is directly related to the offense level. See U.S.S.G. § 2b1.1(b)(1). Schubert's victims' loss amount yielded an 18-level increase. Id. Specifically, Schubert argues his attorney should have objected to: 1) the loss amounts associated with the victims who did not submit loss declaration forms or loss materials to probation, 2) the loss amounts associated with 4 sets of initials that were “unknown” to Schubert, 3) the loss amount for C.W. because C.W. was not an investor or victim, and 4) the absence of credits against loss amounts.
Schubert argues each of these issues would have resulted in separate or cumulative reductions in the loss amount, which would have resulted in a lower Guideline recommendation. However, as previously found, Judge Pitman sentenced Schubert entirely outside of the Guideline scheme. For the reasons already discussed, there is no reason to believe, other than speculation, that Judge Pitman would have imposed a different sentence if a different Guideline range had been calculated. Accordingly, Schubert has not shown he was prejudiced by his counsel's failure to object to these issues. Claim 1 can be denied on this basis alone.
Nonetheless, after providing an overview of relevant law, the court will address each of Schubert's arguments in turn.
1. Loss Amount and a PSR
For sentencing purposes, “loss is the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1, Application Note 3(A). “Actual loss means the reasonably foreseeable pecuniary harm that resulted from the offense.” Id. at 3(A)(i). “Intended loss (I) means the pecuniary harm that the defendant purposely sought to inflict; and (II) includes intended pecuniary harm that would have been impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance fraud in which the claim exceeded the insured value).” Id. at 3(A)(ii).
U.S.S.G. § 2B1.1, Application Note 3(D) describes some exclusions from loss that are not relevant here.
“Pecuniary harm means harm that is monetary or that otherwise is readily measurable in money. Accordingly, pecuniary harm does not include emotional distress, harm to reputation, or other non-economic harm.” Id. at 3(A)(iii). “For purposes of this guideline, ‘reasonably foreseeable pecuniary harm' means pecuniary harm that the defendant knew or, under the circumstances, reasonably should have known, was a potential result of the offense.” Id. at 3(A)(iv).
Some amounts may be credited against the loss amount. Id. at 3(E). These include money or property returned by the defendant to the victim “before the offense was detected.” Id. at 3(E)(i). The offense is detected at the earlier of either the time it was discovered by a victim of government agency or the time the defendant knew or reasonably should have known the offense was detected or about to be detected by a victim or government agency. Id.
The court need only make a reasonable estimate of the loss. The sentencing judge is in a unique position to assess the evidence and estimate the loss based upon that evidence. For this reason, the court's loss determination is entitled to appropriate deference. Id. 3(C) (citing 18 U.S.C. § 3742(e) and (f)). The estimate of loss shall be based on available information, taking into account factors such as the fair market value of the property taken, the approximate number of victims multiplied by the average loss to each victim, and more general factors such as the scope and duration of the offense and revenues generated by similar operations. Id.
“Generally, a PSR bears sufficient indicia of reliability, such that a sentencing judge may consider it as evidence in making the factual determinations required by the Sentencing Guidelines.” United States v. Gentry, 941 F.3d 767, 788 (5th Cir. 2019) (citing United States v. Huerta, 182 F.3d 361, 364 (5th Cir. 1999)). While “a district court must resolve disputed issues of fact if it intends to use those facts as a basis for sentencing, the court can adopt facts contained in a PSR without inquiry, if those facts have an adequate evidentiary basis and the defendant does not present rebuttal evidence.” Huerta, 182 F.3d at 364. Additionally, a “defendant's rebuttal evidence must demonstrate that the information contained in the PSR is ‘materially untrue, inaccurate or unreliable,' and ‘[m]ere objections do not suffice as competent rebuttal evidence.'” Id. (quoting United States v. Parker, 133 F.3d 322, 329 (5th Cir. 1998)).
2. Victims Who Did Not Submit Loss Declaration Forms or Loss Materials to Probation
Schubert argues that of the 45 victims identified in the PSR as incurring losses, 20 of them did not submit materials to the Probation Officer who prepared the PSR. Schubert argues these 20 victims' loss amounts totaled $1,900,000. Schubert further argues that if that amount were removed from the loss determined, the loss amount would have been $3,152,366.92. That loss amount would have yielded a 2-level decrease in offense level and lowered sentencing range. Accordingly, Schubert argues his trial counsel should have objected to the inclusion of these 20 victims' loss amounts and he was prejudiced by trial counsel's failure to do so.
The Government argues the PSR included information provided by FBI agents, and the Guidelines do not require that a person file an affidavit of loss to be considered a victim. In response, Schubert asserts “nothing in the PSR supports the government's assertion that ‘[t]he PSR included information provided through FBI agents who had already provided a list of these victims and the amounts lost by each [victim].” Dkt. 74 at 24.
Although the PSR does not literally identify a list of victims and losses provided by the FBI, the PSR does state:
For the purposes of determining restitution in this case, the investigation revealed approximately 45 victims invested funds for partial ownership of a specific hotel, rebranding and renovations of a particular hotel, or were individual lenders. The investigation concluded that the total loss for these investors was at least $5,052,366.92.PSR ¶ 45. Thus, it is apparent that the PSR relied on information from the FBI investigation, not merely the victim affidavits, to determine the amount of loss. Moreover, the PSR is replete with information from the investigation. See PSR ¶¶ 5-39.
As the Government points out, victim affidavits are not required to show loss. See U.S.S.G. § 2B1.1, Application Note 3(C). Schubert argues his trial attorney should have objected to the loss amounts that were not accompanied by victim impact statements, but he fails to demonstrate what rebuttal evidence trial counsel should have presented to the district court. See Huerta, 182 F.3d at 364 (“[m]ere objections do not suffice as competent rebuttal evidence”). Accordingly, he has failed to show trial counsel's performance was deficient or that he was prejudiced by trial counsel's lack of an unsupported objection.
Notably, Schubert concedes he recognizes the initials of 41 of the 45 victims identified in the PSR. See Dkt. 56 at 89. Thus, if the PSR were factually incorrect as to the loss amounts of victims who did not submit affidavits, Schubert should have evidence of that to present to the court.
3. Victims Unknown to Schubert
Schubert argues victim E.D. was found to have $40,000 loss, victim J.K. was found to have a $50,000 loss, victim S.M. was found to have $250,000 loss, and victim S.S. was found to have a $50,000 loss. Schubert contends he does not recognize these initials as corresponding to any investors or to any individual who submitted loss materials to the Probation Officer. Thus, Schubert asserts that his counsel should have objected to the inclusion of these losses, reducing the total loss amount further by $390,000.
However, as these four victims did not submit loss affidavits to the Probation Officer, it appears they were included in the 20 victims considered in the previous section. Thus, it appears that Schubert is double counting them in his proposed reductions. For the same reasons as previously discussed-Schubert's lack of contradictory evidence-Schubert's trial counsel was not deficient for failing to object to these four specific victims and Schubert has not shown he was prejudiced by trial counsel's failure to make an unsupported objection. Additionally, this loss amount alone would not have affected Schubert's Guideline range and could have been prejudicial under Schubert's assumption that his sentence was some percentage of the appropriate Guideline range.
4. C.W.
C.W. claimed Schubert caused him to lose $495,000. Dkt. 22-3 at 237-240. The Probation Officer determined that C.W. lost $200,000 as part of Schubert's fraudulent scheme. Relying on a letter C.W. sent with his Declaration of Losses, Schubert argues C.W. was not a victim of his scheme because C.W. did not provide Schubert with funds to invest and thus his losses should not have been included in the loss amount. Dkt. 56 at 99-101 (citing Dkt. 22-3 at 237-240).
This argument ignores C.W.'s actual statement. See Dkt. 22-3 at 237-240. C.W. states that he allowed Schubert to speak to a local real estate investors association, and C.W. eventually decided to sign up for $50,000 to be a part of Schubert's investment scheme. C.W. identified a hotel he wanted to invest in, and after Schubert assured C.W. that Schubert's lenders would back him, C.W. put down $170,000 of nonrefundable earnest money on that hotel. Schubert's lenders failed to back the investment, and C.W. lost the earnest money. Id.
C.W. then states he invested $150,000 in a hotel, without Schubert's help. Id. But after the hotel began making a profit, C.W. eventually contracted with Schubert to run the hotel. Id. Once Schubert “took over, [Schubert] locked [C.W.] out of all the financials [sic] records, the daily reports.... [Schubert] milked every penny out of the hotel, [C.W.] never received a penny from [Schubert] on what the hotel made. After 8 months of [Schubert] not paying any bills or lease payments [C.W.] lost the hotel and [Schubert] would not take any of [C.W.'s] calls or emails. Id.
The Information alleged that
As part of his scheme, Defendant would often take over management of one or more hotels, and falsely and fraudulently represent that he was experienced in hotel management, when he was not. Defendant would also periodically collect a substantial management fee for his purported services. Defendant's “management” activities included taking sole control of hotel bank accounts, restricting investors from accessing bank accounts, failing to inform investors about financial activities, and using the funds in those accounts for Defendant's own personal use and benefit.Dkt. 1 ¶ 6. The factual basis for his guilty plea also describes this conduct. Dkt. 5 ¶ 4.h.
Thus, C.W.'s documentation supports a loss of at least $200,000 from Schubert's fraudulent scheme. Schubert's argument that C.W. was not a victim of Schubert's fraudulent scheme is factually baseless.
5. Absence of Credits Against Loss Amounts
Schubert argues his counsel was ineffective because he failed to object to the PSR's failure to give credits against victim loss amounts under U.S.S.G. § 2B1.1 and Application Note 3(E).
First, Schubert argues he paid victim J.F. $54,600 between June 2019-February 2022, and this amount should have been credited against J.F.'s $300,000 loss. However, only money or property returned by the defendant to the victim “before the offense was detected” is credited against the loss amount. U.S.S.G. § 2B1.1, Application Note 3(E)(i). The FBI first received information about Schubert's scheme in 2014. PSR ¶ 26. In April 2015, Schubert met with FBI agents and gave a statement. PSR ¶ 27. Schubert makes no argument as to why the time limit of Application Note 3(E)(i) should not apply. Thus, payments to J.F. after 2014 should not be credited against his loss amount under Application Note 3(E). Accordingly, Schubert has failed to show his counsel was deficient for failing to object that payments to J.F. were not credited against his loss.
Next, Schubert identifies 23 victims who invested in hotels and argues their losses were not credited with the value of any collateral (ownership in a hotel or LLC) or with funds or distributions previously returned to them. As noted above, only monies paid back before the scheme was discovered are credited against losses. Additionally, the court gives no weight to Schubert's belief that because some hotels were ongoing businesses his victims had not suffered losses. Schubert's entire scheme discredits his business acumen. Moreover, as his brief noted, at least some of his victims were unable to sell properties or investments because they had been so poorly mismanaged by Schubert. See Dkt. 56 at 109 n.127 (citing Victim Declaration Form Dkt. 22-3 at 107). Accordingly, Schubert has not shown his counsel was ineffective for failing to make these objections.
6. Conclusion
As described above, the undersigned does not believe Schubert's sentence was a function of the Guideline range. Instead, Judge Pitman sentenced him entirely outside the Guideline range. Claim 1 can be denied on that basis.
Even under Schubert's theory, in order to reduce his Guideline range, Schubert must reduce his victims' loss amount by at least $1,552,366.92. See U.S.S.G. § 2B1.1(b)(1)(J). Any reduction less than that amount could not be prejudicial under Schubert's theory that his sentence was based on a 28.42% reduction of his Guideline range.
Schubert attempts to chip away at his victims' loss amount in every way imaginable in the hope of demonstrating his counsel was ineffective. Schubert concedes that eight of the victims' losses are entirely accurate and their losses total $876,399.92 and this “appears to be the minimum, total loss amount for purposes of accurately calculating the Guidelines under USSG § 2B1.1.” Dkt. 56 at 102-103. But this argument conveniently ignores that in his plea agreement he conceded he caused investors losses of approximately $2,000,000. Dkt. 5 ¶ 4.p. Schubert has not shown that his counsel was ineffective for failing to make the objections he argues should have been made.
Moreover, there are legitimate tactical reasons for trial counsel to forego the pursuit of individual Guideline objections at sentencing. This is particularly true in a case such as this where trial counsel's primary goal was the pursuit of a downward variance under 18 U.S.C. § 3553. Here, that tactical decision was a partial success. Although Schubert did not receive a sentence of probation as his motion for downward departure sought, he was the beneficiary of a substantial variance from the lowest end of the applicable Guideline range. Accordingly, the undersigned finds that Schubert's trial counsel failure to make the objections identified in Claim 1 did not fall below an objective standard or reasonableness and, even if it did fall below that standard, it was not prejudicial to Schubert.
C. Claim 3
Schubert argues trial counsel should have objected to the restitution amount and sought an evidentiary hearing to determine the amount of restitution. In addition to arguing that the loss amounts were incorrectly determined, Schubert argues that he paid $1,149,781.24 in “restitution” before his sentencing, see Dkt. 36 (Def's Memorandum for Downward Variance), but only six payments totaling $436,209.86 were paid to victims listed in the PSR. Dkt. 56 at 145. And none of that money has been applied to his restitution balance.
This, of course suggests the obvious-the PSR did not fully capture all of Schubert's victims and their losses.
However, “complaints concerning restitution may not be addressed in § 2255 proceedings.” United States v. Hatten, 167 F.3d 884, 887 (5th Cir. 1999); see also United States v. Parker, 927 F.3d 374, 381 n.8 (5th Cir. 2019); United States v. Singh, 836 Fed.Appx. 331, 333 (5th Cir. Feb. 17, 2021); United States v. Thiele, 314 F.3d 399-402 (9th Cir. 2002) (petitioner not permitted to “collaterally attack his restitution order in a §2255 motion” even though he “couched his restitution claim in terms of ineffective assistance of counsel”). A monetary penalty is not a sufficient restraint on liberty to meet the “in custody” requirements of § 2255. Campbell v. United States, 330 Fed.Appx. 482, 483 (5th Cir. 2009) (citing Hatten, 167 F.3d at 887). Additionally, in his plea agreement, Schubert “agrees to the entry of a restitution order for the full amount of the losses incurred by any victim of the offense of conviction and any restitution attributable to any relevant conduct.” Dkt. 5 at 6d. As the Government argues, even if the loss amount was adjusted downward, Schubert agreed to the entry of a restitution order for the full amount of the losses incurred by any victim of the offense of conviction and any restitution attributable to any relevant conduct. See Dkt. 73 at 24.
Accordingly, Schubert has not shown his trial counsel was deficient for not seeking an evidentiary hearing on restitution or for not objecting to the restitution amount.
D. Claim 4
Finally, Schubert argues trial counsel was ineffective for not objecting to a 2-level upward adjustment for sophisticated means under U.S.S.G. 2B1.1(b)(10). Schubert argues the PSR is silent as to why this enhancement was applied and if it had been challenged, the Government could not have sustained its burden to support it.
The Guidelines instruct:
(10) If (A) the defendant relocated, or participated in relocating, a fraudulent scheme to another jurisdiction to evade law enforcement or regulatory officials; (B) a substantial part of a fraudulent scheme was committed from outside the United States; or (C) the offense otherwise involved sophisticated means and the defendant intentionally engaged in or caused the conduct constituting sophisticated means, increase by 2 levels. If the resulting offense level is less than level 12, increase to level 12.U.S.S.G. 2B1.1(b)(10).
For purposes of subsection (b)(10)(C), “sophisticated means” means especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense. For example, in a telemarketing scheme, locating the main office of the scheme in one jurisdiction but locating soliciting operations in another jurisdiction ordinarily indicates sophisticated means. Conduct such as hiding assets or transactions, or both, through the use of fictitious entities, corporate shells, or offshore financial accounts also ordinarily indicates sophisticated means.U.S.S.G. 2B1.1(b)(10) Application note 9.
Quoting the PSR's summary of Schubert's scheme, see PSR ¶¶ 37-39, Schubert argues the “means” employed do not reflect “especially complex or especially intricate” offense conduct. Dkt. 56 at 155. Schubert's argument ignores the factual basis of his plea:
Defendant formed numerous entities, including the entities set forth in paragraph 1 of the Information (the Schubert Entities), to conduct his seminars, to operate hotels, to engage in financial transactions relating to his various businesses, to manage investor funds intended for purchasing and operating hotel properties, and to use for his own personal use and benefit. Defendant formed several companies related to his seminars. Defendant also opened and maintained over 50 bank accounts related to his many business entities, and regularly transferred funds among the bank accounts. These transfers, which were part of Defendant's scheme, were primarily designed to allow Defendant to enrich himself, and were done without the knowledge or consent of investors.Dkt. 5 ¶ 4e; see also id. at ¶¶ 4h-k. Additionally, the PSR recites that “Schubert created, controlled and maintained at least 31 different entities .... Through such entities, he . . . managed investors funds, while ultimately transferring investor funds for his own personal gain.” Dkt. 22 (PSR) ¶ 6; see also id. at ¶¶ 17 and 19 (describing transferring funds among various accounts).
The Plea Agreement and the PSR support the finding that Schubert hid assets and transactions through the use of his various entities, corporate shells, and accounts to perpetuate his fraudulent scheme. Schubert has not shown his counsel was ineffective for not objecting to this 2-level adjustment. However, as with Claims 1 and 2, because Schubert's sentence was not based on the Guideline range, he cannot show prejudice even if this enhancement had been incorrectly applied.
E. Request for Discovery and an Evidentiary Hearing
Schubert requests discovery from his trial counsel, but Schubert has not shown why any discovery is needed. Schubert repeatedly criticizes his trial counsel for his alleged failures to investigate various issues or to timely do other things. But what matters in this analysis are whether counsel's representation fell below and objective basis and whether that representation prejudiced Schubert. Schubert has failed to show why discovery is needed to argue either Strickland prong. Accordingly, his request is denied.
Schubert also requests an evidentiary hearing. Schubert has not shown that an evidentiary hearing is warranted. For the reasons given above, Schubert's claims that trial counsel was ineffective are without merit. Accordingly, the undersigned denies Schubert's request for a hearing.
F. Conclusion
Unlike many criminal defendants, Schubert was not in custody until after his sentencing. Dkt. 40 at 2 (Judgment). He retained his own counsel early in the investigation. Dkt. 36 at 3. Thus, he was without the constraints many typical defendants face in marshalling evidence to defend themselves. Notwithstanding these advantages and his extremely favorable sentence, he is unhappy with his sentence and restitution amount. He now blames trial counsel in a myriad of ways for his sentence and restitution. Schubert's arguments here are no more convincing than his claims at sentencing that he was just trying to help people and do right by them.
As previously noted, there are legitimate tactical reasons to emphasize a motion for a downward variance at the expense of the pursuit of individual Guideline objections. Accordingly, the undersigned finds that Schubert's trial counsel's failure to make the objections identified in Claims 1, 3, and 4 did not fall below an objective standard or reasonableness and, even if it did fall below that standard, it was not prejudicial to Schubert. Similarly, the failure to object to the 2-level enhancement identified in Claim 2 was not prejudicial to Schubert because he was sentenced entirely outside of the Guidelines.
VI. Recommendations
For the reasons given above, the Magistrate Court respectfully RECOMMENDS Petitioner Jason Michael Schubert's Motion to Vacate, Set Aside, or Correct Sentence Pursuant to 28 U.S.C. § 2255 (Dkt. 56) be DENIED.
For the reasons given above, the court DENIES Schubert's request for discovery (Dkt. 71) and request for an evidentiary hearing.
VII. Certificate of Appealability
An appeal may not be taken to the court of appeals from a final order in a proceeding under section 2255 “unless a circuit justice or judge issues a certificate of appealability.” 28 U.S.C. § 2253(c) (1)(A). Pursuant to Rule 11 of the Federal Rules Governing Section 2255 Proceedings, effective December 1, 2009, the district court must issue or deny a certificate of appealability when it enters a final order adverse to the applicant.
A certificate of appealability (“COA”) may issue only if a movant has made a substantial showing of the denial of a constitutional right. 28 U.S.C. § 2253(c)(2). The Supreme Court fully explained the requirement associated with a “substantial showing of the denial of a constitutional right” in Slack v. McDaniel, 529 U.S. 473, 484 (2000). In cases where a district court rejected a movant's constitutional claims on the merits, “the petitioner must demonstrate that reasonable jurists would find the district court's assessment of the constitutional claims debatable or wrong.” Id. “When a district court denies a habeas petition on procedural grounds without reaching the petitioner's underlying constitutional claim, a COA should issue when the petitioner shows, at least, that jurists of reason would find it debatable whether the petition states a valid claim of the denial of a constitutional right and that jurists of reason would find it debatable whether the district court was correct in its procedural ruling.” Id.
In this case, reasonable jurists could not debate the denial of the movant's section 2255 motion on substantive or procedural grounds, nor find that the issues presented are adequate to deserve encouragement to proceed. Miller-El v. Cockrell, 537 U.S. 322, 327 (2003) (citing Slack, 529 U.S. at 484). Accordingly, it is respectfully recommended that the District Court not issue a certificate of appealability.
VIII. Objections
The parties may file objections to this Report and Recommendation. A party filing objection must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).