Opinion
CASE NO. 2:12-CV-277 CRIM. NO. 06-CR-129(6)
02-11-2014
RANDOLPH SPEER, Petitioner, v. UNITED STATES OF AMERICA, Respondent.
JUDGE MARBLEY
MAGISTRATE JUDGE ABEL
ORDER and
REPORT AND RECOMMENDATION
Petitioner, a federal prisoner, brings the instant amended motion to vacate, set aside or correct sentence pursuant to 28 U.S.C. § 2255. This matter is before the Court on Petitioner's motion, as amended, Respondent's Return of Writ, Petitioner's Response in Opposition, and the exhibits of the parties. This case involves Petitioner's convictions after a jury trial on conspiracy to commit securities and wire fraud, securities fraud, wire fraud, conspiracy to commit money laundering, concealment money laundering. On April 1, 2011, the United States Court of Appeals reversed Petitioner's convictions involving money laundering but otherwise affirmed the judgment of the District Court. The Court imposed an aggregate term of twelve years incarceration. In this federal habeas corpus petition, Petitioner asserts that he was denied a fair trial due to prosecutorial misconduct, ineffective assistance of counsel, and violation of the Federal Rules of Evidence. For the reasons that follow, this Court concludes that none of the foregoing claims provide a basis for relief and therefore RECOMMENDS that this action be dismissed.
Petitioner's requests for discovery, Docs. # 1166, 1167, 1168, 1179, 1171, 1166-68, 1171, 1178, 1179, all are DENIED.
Respondent's motion to quash subpoenas, Docs. # 1195, 1198, are GRANTED.
Petitioner's motions to expand the record, Docs. # 34, 1235,1236, 1242; 1242, 1246; 1249; 1269; 1271, 1272; 1276; 1278; and 1280, all are DENIED.
Petitioner's motions for reconsideration, Docs. # 1266, 1268, are DENIED.
Facts and Procedural History
The United States Court of Appeals for the Sixth Circuit summarized the facts and procedural history of this case as follows:
Defendant Randolph H. Speer was convicted of one count of conspiracy to commit securities and wire fraud, 18 U.S.C. § 371, three counts of securities fraud, 15 U.S.C. §§ 77q(a) & 77x & 2, one count of wire fraud, 18 U.S.C. §§ 1343 & 2, one count of conspiracy to commit money laundering, 18 U.S.C. § 1956, and five counts of concealment money laundering, 18 U.S.C. § 1956(a)(1)(B)(i). . . .United States v. Speer, 419 Fed.Appx. 562, unpublished, 2011 WL 1211097, at *1-2 (6th Cir. 2011). On April 1, 2011, the United States Court of Appeals for the Sixth Circuit reversed Petitioner's convictions on money laundering (Counts 17-22 of the Indictment), and remanded the case to the District Court for re-sentencing. The Sixth Circuit otherwise affirmed the judgment of the District Court. Id. On May 17, 2011, the mandate issued. Doc. No. 1122. On March 26, 2012, the Court issued an amended Judgment Entry imposing an aggregate term of twelve years imprisonment. Doc. No. 1148.
***
National Century Financial Enterprises (NCFE) purchased healthcare providers' accounts receivable at a discount and pooled those receivables to secure bonds that it sold to institutional investors to raise capital for the purchase of the receivables. NCFE also collected program fees from the healthcare providers. The investors earned interest and were repaid through collections on the receivables. Providers, meanwhile, were paid almost immediately for services, rather than having to wait for insurers to process and pay claims. This business model was, in theory, a sound one.
NCFE operated primarily through two subsidiaries, NPF VI and NPF XII. These entities issued the actual bonds. Another NCFE subsidiary, National Premier Financial Services (NPFS), was responsible for performing the day-to-day services necessary to purchase the receivables, administer the accounts, and manage the collection of the receivables. A Master Indenture Agreement detailed the legal obligations among the bond issuers, NPFS, and the banks that served as trustees of the NPF programs' accounts. NPFS was responsible for determining which receivables were
eligible for purchase and the trustee banks were required to monitor the programs on behalf of the bond-holders. The notes issued to bond-holders contained written terms that restricted the use of the funds invested to the purchase of eligible receivables. The notes also detailed credit enhancements, including overcollateralization, credit reserves, and other means of ensuring that the principal owed on the notes would be secure.FN1
FN1. First, NCFE executives represented that investors' funds would only be used to purchase "eligible receivables," or receivables meeting certain criteria for a low risk of default. Second, the receivables would serve as collateral for the amounts that NCFE owed its bond-holders. Every time NCFE sent investors' funds to a provider, the investors would obtain roughly equivalent collateral in the form of purchased receivables. Third, NCFE executives told investors that it would maintain reserve accounts equal to 17% of the "outstanding Purchase Receivables"; in the event that the purchased receivables were not paid, NCFE could then withdraw the unpaid amount from the reserve accounts. Fourth, NCFE indicated that the accounts containing investors' funds would have trustee oversight.
Although its business model was outwardly strong, the actual practices of NCFE varied drastically from what investors were promised. Rather than being used only to fund the purchase of eligible receivables, much of the funding brought in from the sale of bonds was used to advance money to healthcare providers without the purchase of receivables. Several of these providers had no realistic ability to repay the advances and lacked adequate receivables to support the amounts advanced. The improper advances, some of which were made to companies in which NCFE principals held ownership stakes, severely depleted the cash reserves that NPF VI and NPF XII were required to maintain to protect bond-holders. To cover the losses, NCFE issued more notes. NCFE executives also falsified data presented to investors. Additionally, NCFE moved funds between various accounts within and across NPF VI and NPF XII to meet minimum funding requirements on reporting dates. The reporting dates for the two programs were staggered so that the same funds could be counted separately by each program to meet investor requirements.
Eventually, the scheme became unsustainable. At the end of September 2002, one of the trustee banks blocked a transfer between NPF VI and NPF XII, triggering an event of default. In November 2002, NCFE filed for bankruptcy, resulting in investor losses of approximately $2.4 billion. On November 12, 2002, the
FBI raided NCFE's headquarters, seizing its files and documents. The ensuing investigation revealed substantial financial irregularities.
In 2006, the government secured indictments against seven of NCFE's executives on charges of conspiracy, securities fraud, wire fraud, mail fraud, and money laundering.FN2 Five of the seven executives, including Speer, were jointly tried. After a six-week trial and two days of deliberation, Speer was convicted of one count of conspiracy to commit securities and wire fraud, three counts of securities fraud, one count of wire fraud, one count of conspiracy to commit money laundering, and five counts of concealment money laundering. Speer moved for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 at the close of the government's case-in-chief and again at the close of trial. The district court denied both motions, as well as Speer's renewed motion made following his convictions, stating:
FN2. Three other former executives cooperated with the government and pleaded guilty.
The trial in this case lasted for six weeks. The twenty-two volume trial transcript shows that Defendants had considerable opportunities to, and in fact did, attack the Government's evidence against them by putting on their own defenses and by extensively cross-examining the Government's witnesses and challenging its documentary evidence. The record also shows that the evidence against Defendants was substantial. Six former National Century employees testified and three of these—Jon Beacham, Sherry Gibson, and Jessica Bily—were senior executives with intimate knowledge of the company's operations and how it perpetrated investor fraud. Each of these executives admitted to engaging in criminal conduct and they all implicated Defendants in the criminal conspiracy. Besides National Century insiders, the Government put on witness testimony from the investors whose money, unbeknownst to them, was improperly used to make unsecured loans to healthcare providers. The Government also called to the stand representatives of the healthcare providers, who confirmed that they asked for, and received, hundreds of millions of dollars in National
Century loans that the providers had little ability to pay back.Speer appeals, claiming that the evidence was insufficient to support his convictions and the district court erred in denying his motion to suppress evidence seized during the warrant-authorized search of NCFE's headquarters. FN3
FN3. In addition to advancing his own arguments in an attempt to invalidate his convictions, Speer adopts three arguments previously put forth by his co-defendants, Donald Ayers and Roger Faulkenberry. Speer does not add any new evidence or analysis to buttress these arguments. As this court has already examined and rejected these arguments on the merits in United States v. Ayers, 386 Fed.Appx. 558 (6th Cir.2010), and Faulkenberry, 614 F.3d 573, we reject them here as well.
On March 30, 2012, Petitioner filed the motion to vacate, set aside or correct sentence under 28 U.S.C. § 2255 that is now before the court. Petitioner Speers asserts he is being held in the custody of the Respondent in violation of the Constitution of the United States based on prosecutorial misconduct (claim one); violation of the Federal Rules of Evidence (claim two); and lack of legal representation (claim three). Speers has submitted several lengthy affidavits of his own in support of these claims. See PageID #25255-25264. Between May 10, 2012 and June 18, 2012, Petitioner filed twelve amendments to this habeas corpus petition. See Doc. Nos. 1156-1159; 1163-1171. In amendments one through seven, Petitioner adds additional arguments in support of his claims and submits his own affidavit in support. The remainder of Petitioner's amendments eight through twelve constitute discovery requests and will be addressed with the remainder of Petitioner's requests for discovery.
It is the position of the Respondent that none of Petitioner's claims warrant federal habeas corpus relief.
Discovery Requests:
Petitioner has filed numerous requests for discovery. In "Amendment Eight," Doc. # 1166, Petitioner requests that the United States provide all documents and information related to the testimony of prosecution witness Woofley, including his contract with the government, modifications to the original contract, letters, memos, emails, written instructions, notes of oral instructions, instructions to prepare physical evidence, minutes of meetings, work papers, drafts of schedules and documents, drafts and work papers of schedules created for use as physical evidence, notes from telephone conversations, a schedule that identifies the date, time and length of each meeting, a schedule that identifies the date, time and length of each telephone conversation and all documents related to the prosecution's theories and strategies. See PageID #25380-81.
In "Amendment Nine," Doc. #1167, Petitioner seeks an affidavit from the United States indicating that the government used a "funding department approval form" and called it a "wire transfer approval form" even though the actual wire transfer approval form was not signed by Petitioner and the Bank Trustees, Bank One and J.P. Morgan Chase never received a wire transfer approval form that was signed by Petitioner because he was not authorized to approve wire transfers of NCFE debt investor funds. PageID #25383.
In "Amendment Ten," Doc. #1168, Petitioner seeks an affidavit from the United States indicating that the government presented testimony from NCFE debt investors to validate NCFE debt investor losses who did not know the petitioner, how much they invested, the amount or cause of their loss, exercised little or no due diligence prior to their investment, five and one half years was an inadequate time to prepare for their testimony, they could not recite any misrepresentations made by Petitioner and had a total lack of personal knowledge regarding the subject matter without violating Federal Rules of Evidence. PageID #25385.
In "Amendment Eleven," Doc. #1179, Petitioner seeks an affidavit from the United States indicating that NCFE debt investor losses were solely attributable to NCFE's practice of making advances, not attributable to the failure to make a collection effort, failure to foreclose and seize cash and receivables they owned, to health care providers retaining physical control over the receivables sold, converting receivables sold to cash and keeping the cash and to theft of cash and receivables by health care providers. Petitioner additional requests the United States to indicate that health care providers who participated in NCFE's funding programs did not commit fraud. PageID #25389.
In "Amendment Twelve," Doc. No. 1171, Petitioner seeks an affidavit from the United States indicating as follows:
1. NCFE's funding program was a loan transaction and not an asset securitization.PageID #25391-92.
2. Petitioner Speer made no misrepresnentations to NCFE debt investors when he made investor presentations.
3. Petitioner Speer received no criminal proceeds or profit from his convictions of criminal wrongdoing except for the compensation paid to him in accordance with his employment agreement that was entered into as a condition of employment as a recruited employee.
4. Petitioner Speer created electronic and paper documentation that was complete and accurate to support the use of NCFE debt investor funds.
5. The 'certificates of incumbanc' signed by Petitioner Speer were complete and accurate in their content but where presented in Court by the United States to be able to state,
'Petitioner Speer certified information.' This was an intentional deceptive and distortive use of complete and accurate certificates.
6. Compensation paid to Petitioner Speer was not excessive or unusual based on his professional experience and compensation history.
7. Petitioner Speer did not violate any provision contained within the controlling funding program legal contracts and documents to include the Indenture, the Sales and Sub-servicing Agreement or any other operating document operating within NCFE's funding program.
8. NCFE's Private Placement Memorandums did not contain any material misrepresentation, misleading, incomplete or deceptive information or disclosure.
9. NCFE's audited financial statements did not contain any material misrepresentation, misleading, incomplete or deceptive information or disclosure and included disclosure regarding the advance method of funding.
10. The disclosure of advances in NCFE's audited financial statements was ignored by the United States because it did not support the United States prosecutiral scheme to convicte Petitioner Speer and the United States intentionally utilized an assertion strategy to criminalize advances by making statements regarding advances to specifically ijmjply that the business practice of making advances was illegal without an indictment to claim advances were in fact illegal.
11. Petitioner Speer was not indicted for making advances, for approving advances without adequate receivables or making unsecured loans.
Petitioner additionally requests the Court to order Respondent to disclose to Petitioner "any and all conversations and the content of those conversations between the United States and Petitioner's . . . legal representatives." See Statement Regarding Legal Representation and Request for Affidavit, Doc. #1178, PageID #25406-07.
Petitioner's request for a Court order requiring his prior attorneys to disclose "any and all conversations and the content of those conversations" with the United States, Doc. No. 1178, is DENIED.
Respondent's Motions to Quash Subpoenas, Doc. Nos. 1195, 1198, are GRANTED.
The discovery processes contained in the Federal Rules of Civil Procedure do not automatically apply to habeas corpus actions. "A habeas petitioner, unlike the usual civil litigant in federal court, is not entitled to discovery as a matter of ordinary course." Bracy v. Gramley, 520 U.S. 899, 904 (1997). In Harris v. Nelson, 394 U.S. 286, 295 (1969), the United States Supreme Court held that the "broad discovery provisions" of the Federal Rules of Civil Procedure did not apply in habeas corpus proceedings. Rule 6(a) of the Rules Governing Section 2254 Cases in United States District Courts, promulgated in 1976, provides:
A party shall be entitled to invoke the processes of discovery available under the Federal Rules of Civil Procedure if, and to the extent that, the judge in the exercise of his discretion and for good cause shown grants leave to do so, but not otherwise.Under this "good cause" standard, a district court should grant leave to conduct discovery in habeas corpus proceedings only " 'where specific allegations before the court show reason to believe that the petitioner may, if the facts are more fully developed, be able to demonstrate that he is ... entitled to relief....' " Bracy, 520 U.S. at 908-909 (quoting Harris, 394 U.S. at 300). See also Stanford v. Parker, 266 F.3d 442, 460 (6 Cir. 2001).
"The burden of demonstrating the materiality of the information requested is on the moving party." Stanford, 266 F.3d at 460. Rule 6 does not "sanction fishing expeditions based on a petitioner's conclusory allegations." Rector v. Johnson, 120 F .3d 551, 562 (5th Cir. 1997); see also Stanford, 266 F.3d at 460. "Conclusory allegations are not enough to warrant discovery under [Rule 6]; the petitioner must set forth specific allegations of fact." Ward v. Whitley, 21 F.3d 1355, 1367 (5th Cir.1994).Williams v. Bagley, 380 F.3d 932, 975 (6th Cir. 2004). Upon review of the entire record, this Court is not persuaded that petitioner has met this standard.
All of Petitioner's requests for discovery not previously denied (see Doc.# 1243), which include Docs. #1166-68, 1171, 1178, 1179, are DENIED.
Motions to Expand the Record:
Petitioner has filed numerous motions to expand the record pursuant to Rule 7 of the Rules Governing Section 2255 Proceedings in the United States District Courts, which provides:
Expanding the Record
(a) In General. If the motion is not dismissed, the judge may direct the parties to expand the record by submitting additional materials relating to the motion. The judge may require that these materials be authenticated.
(b) Types of Materials. The materials that may be required include letters predating the filing of the motion, documents, exhibits, and answers under oath to written interrogatories propounded by the judge. Affidavits also may be submitted and considered as part of the record.
(c) Review by the Opposing Party. The judge must give the party against whom the additional materials are offered an opportunity to admit or deny their correctness.
The purpose of this rule is not only to enable the district court to dispose of petitions not dismissed on the pleadings without the time and expense of an evidentiary hearing, but also to assist the district court in determining whether an evidentiary hearing is warranted. See Blackledge v. Allison, 431 U.S. 63, 81 (1977). The decision whether to order an expansion of the record under Rule 7 falls within the sound discretion of the district court. Ford v. Seabold, 841 F.2d 677, 691 (6th Cir.1988).
Petitioner's motions to expand the record include, Docs. 1234, 1235,1236, 1242; 1242, 1246; 1249; 1269; 1271, 1272; 1276; 1278; and 1280. In all of Petitioner's motions to expand the record, he again makes lengthy arguments regarding the merits of his claims. He again seeks discovery. He again requests that Respondent be directed to respond to his §2255 petition; and he again argues, at length, that the evidence was constitutionally insufficient to sustain his convictions.
As previously discussed, Respondent already has responded sufficiently to Petitioner's § 2255 claims. The United States Court of Appeals for the Sixth Circuit has already rejected Petitioner's claim that the evidence was constitutionally insufficient to sustain his convictions. Petitioner has failed to establish discovery is warranted. Accordingly, all of Petitioner's motions to expand the record are DENIED. The entire record already before this Court is sufficient for review of Petitioner's claims. Nothing in the submissions and affidavits filed by Petitioner in support of his motions to expand the record would be of assistance in resolving the claims asserted in this action.
Petitioner's motions for reconsideration, Docs.# 1266, 1268, are DENIED.
Petitioner's request for a Court order requiring his prior attorneys to disclose "any and all conversations and the content of those conversations" with the United States, Doc. No. 1178, is DENIED.
Respondent's Motions to Quash Subpoenas, Doc. Nos. 1195, 1198, are GRANTED.
The discovery processes contained in the Federal Rules of Civil Procedure do not automatically apply to habeas corpus actions. "A habeas petitioner, unlike the usual civil litigant in federal court, is not entitled to discovery as a matter of ordinary course." Bracy v. Gramley, 520 U.S. 899, 904 (1997). In Harris v. Nelson, 394 U.S. 286, 295 (1969), the United States Supreme Court held that the "broad discovery provisions" of the Federal Rules of Civil Procedure did not apply in habeas corpus proceedings. Rule 6(a) of the Rules Governing Section 2254 Cases in United States District Courts, promulgated in 1976, provides:
A party shall be entitled to invoke the processes of discovery available under the Federal Rules of Civil Procedure if, and to the extent that, the judge in the exercise of his discretion and for good cause shown grants leave to do so, but not otherwise.Under this "good cause" standard, a district court should grant leave to conduct discovery in habeas corpus proceedings only " 'where specific allegations before the court show reason to believe that the petitioner may, if the facts are more fully developed, be able to demonstrate that he is ... entitled to relief....' " Bracy, 520 U.S. at 908-909 (quoting Harris, 394 U.S. at 300). See also Stanford v. Parker, 266 F.3d 442, 460 (6 Cir. 2001).
"The burden of demonstrating the materiality of the information requested is on the moving party." Stanford, 266 F.3d at 460. Rule 6 does not "sanction fishing expeditions based on a petitioner's conclusory allegations." Rector v. Johnson, 120 F .3d 551, 562 (5th Cir. 1997); see also Stanford, 266 F.3d at 460. "Conclusory allegations are not enough to warrant discovery under [Rule 6]; the petitioner must set forth specific allegations of fact." Ward v. Whitley, 21 F.3d 1355, 1367 (5th Cir.1994).Williams v. Bagley, 380 F.3d 932, 975 (6th Cir. 2004). Upon review of the entire record, this Court is not persuaded that petitioner has met this standard.
CLAIM ONE
In claim one, Petitioner asserts he was denied a fair trial based on prosecutorial misconduct. Specifically, Petitioner asserts the government improperly pursued charges against him to cover up their "overzealous actions" that caused National Century Financial Enterprises ("NCFE") to file for bankruptcy two days after execution of the government's search warrant. Petition, PageID #25232. Petitioner complains that the government ignored misconduct of professional bond fund managers, who claimed victim status to cover up their failure to enforce creditor rights and profits obtained by health care providers who kept receivable and cash assets. PageID #25231-25233. "To ignore this evidence and proceed with the indictment and conviction of movant Speer is prosecutorial misconduct." PageID #25234. Petitioner argues that the government intentionally withheld the failure of NCFE debt investors to enforce creditor rights and fraud by health care providers to instead pursue charges against him, thus constituting prosecutorial misconduct. PageID #25235-37. He complains that the prosecutor knowingly pursued false charges against him and improperly presented evidence indicating Petitioner approved over 400 advances, which was outside of the scope of the indictment and denied him a fair trial. PageID #25238-39. Petitioner complains that the prosecution presented false testimony by presenting a prosecution witness who presented a schedule of compensation paid to him during his employment with NCFE. PageID # 25240-41. He complains that the prosecution made deliberate misstatements in attempting to prove his guilty by "repeatedly calling NCFE's Asset Securitization a loan." PageID #25242. Similarly, he complains that the prosecution deliberately misrepresented information and documents in court, for example, through "Certificates of Incumbency." PageID #25244.
Respondent preliminarily argues that Petitioner in claim one essentially asserts that the evidence was constitutionally insufficient to sustain his convictions, which claim already has been considered on direct appeal and therefore is not properly addressed in these proceedings. Response in Opposition, PageID #25562. The Sixth Circuit Court of Appeals rejected Petitioner's claims of insufficiency of the evidence as follows:
Speer challenges his conspiracy conviction, asserting that there is a lack of evidence relating both to his direct involvement in misleading investors and his knowledge that advances were improper. Speer points to specific portions of testimony that support his position, such as the testimony of Amy Boothe-Fuentes of Alliance Capital, a representative investor, that investors' decisions were based upon their due diligence, representations made by Credit Suisse First Boston, and ratings-agency opinions, and the testimony of Jessica Bily, an NCFE executive, that once a wire transfer was authorized by one of the principals of NCFE, it would have to be completed regardless of whether anyone questioned it.Respondent argues that the United States Court of Appeals thereby implicitly has already addressed Petitioner's § 2255 claims. However, Petitioner now raises these arguments in the context prosecutorial misconduct, ineffective assistance of counsel, and violation of the Federal Rules of Evidence. This Court therefore will address these issues here.
This evidence could, indeed, be viewed as supporting Speer's innocence. However, in reviewing for sufficiency of the evidence, we are required to view the evidence in the light most favorable to the prosecution and "draw all available inferences and resolve all issues of credibility in favor of the jury's verdict." United States v. Sliwo, 620 F.3d 630, 640 (6th Cir.2010) (citations and internal quotations omitted). Thus, the evidence Speer relies on must be viewed in the context of all the evidence and in the light most favorable to the government.
Speer was the Chief Financial Officer (CFO) and executive vice president of finance at NCFE. Sherry Gibson, another NCFE executive, testified that Speer was one of the "most knowledgeable people about advancing money ... without purchasing accounts receivable." Before joining NCFE, Speer had been the Chief Executive Officer (CEO) of RX Medical, a healthcare company that received funding from NCFE. Testimony showed that while working at NCFE, Speer authorized approximately 400 advances from NPF VI and NPF XII, including advances to his former employer, RX Medical, and an affiliated company, Consolidated Health Corporation (CHC). Speer also participated in executive-committee meetings at which NCFE's senior management discussed the effects of the practice of advancing funds on the investment programs, as well as compliance issues and the investor reports. Bily also testified that she discussed her concerns about NCFE's practice of advancing funds with Speer, and Speer "acknowledged that there were problems."
Additionally, Gibson testified that she had to falsify the monthly investor reports so that the reports would comply with program requirements, and that she discussed with Speer "what [she] had to do" with the investor reports. Speer also received*567 a "confidential" copy of a report comparing information in the NCFE investor reports with the information that should have been included in these reports but was not.
Bily testified that Speer met with her and Gibson to discuss problems with end-of-month reporting and "what to do to cover the shortages" with respect to moving funds around between the programs to satisfy monthly reporting requirements. Speer was also copied on memos detailing the shortages in the reserve accounts and the transfer of funds between NPF VI and NPF XII. According to Bily, Speer had been copied on other significant memos, including one describing NCFE's "special funding arrangements" with certain healthcare providers.
Combined with proof of the fraud at NCFE, this testimony provides sufficient evidence for a rational trier of fact to conclude that Speer knowingly participated in the conspiracy to commit the fraud.
B.
Speer next challenges his conviction of wire fraud in violation of 18 U.S.C. § 1343. The wire-fraud charge was based on Speer's authorization of a $300,000 advance from NPF XII to Home Care Concepts of America (HCCA), a healthcare company owned by NCFE's principals.
Section 1343 states, in part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.
This statute requires proof of three elements. The first is that "the defendant devised or willfully participated in a scheme to defraud. [ FN4] The second is that he used or caused to be used an interstate wire communication 'in furtherance of the scheme'; and the third, that he intended to deprive a victim of money or property.' " Faulkenberry, 614 F.3d at 581 (quoting United States v. Prince, 214 F.3d 740, 748 (6th Cir.2000)).
FN4. "The statute's terms suggest that [the defendant] must have 'devised' [the scheme to defraud], but all of the circuits to have decided the issue agree that willful participation is enough." Faulkenberry, 614 F.3d at 581.
Speer argues that the government failed to prove that he had the intent to defraud anyone, that he executed the wire transfer "in conformity with decisions made by [NCFE's] principals/owners," and that the wire-transfer offense is a mere mechanism "by which the alleged securities fraud was alleged to have been committed." FN5 His arguments are unavailing, however.
FN5. The case Speer cites in support of this proposition, United States v. Scialabba, 282 F.3d 475 (7th Cir.2002), deals with the issue of how the term "proceeds" should properly be defined under the money-laundering statute and therefore does not aid Speer's argument regarding the propriety of his wire-fraud conviction.
Based on the evidence described above, the jury had ample reason to conclude that Speer willfully participated in the fraud. Speer's job responsibilities "placed him in close proximity to the fraud," Faulkenberry, 614 F.3d at 581; several witnesses testified that Speer knew about the fraud; and numerous documents supported this testimony. Further, Speer initiated the wire transfer that advanced $300,000 to HCCA and was identified as the person who had authorized the advance on the wire-transfer request form. An interoffice memorandum discussing advances from NPF VI and NPF XII identified Speer as being one of only three NCFE executives who could authorize the release of any wire to any healthcare provider, belying Speer's contention that he was merely acting at the behest of NCFE's principals. The wire transfer furthered NCFE's scheme of providing funds to healthcare providers without obtaining any receivables in return, and the evidence overwhelmingly demonstrates that, through his participation in the scheme, Speer intended to deprive a victim of money or property. Thus, a rational trier of fact could have determined that the government's evidence was credible and found that the advance constituted wire fraud.
C.
Speer also challenges his conviction of three counts of securities fraud. To prove securities fraud under 15 U.S.C. § 77q(a), the government must show the offer or sale of a security through instruments of interstate commerce and fraud in connection with the offer or sale. 15 U.S.C. § 77q(a); see also United States v. Dowlin, 408 F.3d 647 (10th Cir.2005). The statute specifies three forms of fraudulent conduct:
(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.
15 U.S.C. § 77q(a)(1)-(3).
Speer was convicted of three counts of securities fraud relating to notes issued by NPF VI and NPF XII in 2001-2002. Speer maintains that there was no evidence that he made false statements or misrepresentations to investors or that any investor relied on his communications in making investment decisions. He further contends that his signing of incumbency certificates FN6 for NPF VI and NPF XII in connection with note offerings was purely ministerial. Finally, Speer claims that because the "fraud was the product of a very clandestine scheme known only to a select number of individuals," and Speer was not one of these individuals, the evidence fails to support his convictions.
FN6. The certificate states that the company validly exists under Ohio law, that it is in good standing according to Ohio law, that a correct copy of the company's Code of Regulations is attached, and that a correct copy of the resolution authorizing the notes is attached.
The incumbency certificate itself does not make any statement about the validity of the claims made in the note documents. Rather, it states that certain administrative requirements have been met. Beacham stated that the only significance of an incumbency certificate is that "it tells you who is authorized to sign on behalf of [the company] to have [the] transaction executed and issued."
A reasonable jury could find that Speer had committed securities fraud. Gibson testified that none of the NPF VI and NPF XII investor reports were accurate, that the information from the inaccurate investor reports was incorporated into private placement memoranda that were made available to investors, and that the information provided to investors in presentations was consistent with the private placement memoranda. Gibson and Bily both testified that they informed Speer about the falsification of the investor reports. Further, Jon Beacham, NCFE's *569 director of securitization, testified that Speer spoke at a number of investor presentations and discussed NCFE's financial review processes. Beacham also stated that all of the NCFE executives who participated in the investor presentations knew of NCFE's practice of making advances that were not backed by receivables but did not reveal this information to investors.
The fact that funds were repeatedly advanced to providers without sufficient receivables could reasonably be seen as a material omission, as one of the most significant selling points of the notes was their secure nature. Moreover, evidence that Speer both knew of and approved improper advances, as well as testimony that the notes were issued to cover up the reserve shortfalls created by the advances, could support a rational trier of fact's conclusion that, when he signed the incumbency certificates accompanying the note offerings on October 2001, November 2001, and February 2002, Speer knew that the note offerings contained material omissions and false representations.
Although it is doubtful that Speer's signing of the incumbency certificates creates criminal liability, there is ample evidence that Speer took part in a variety of actions during which he knowingly made material misrepresentations and omissions in order to further sales of NCFE's securities. Thus, the statutory requirements of § 77q(a)—that there was an offer or sale of a security through instruments of interstate commerce and fraud (including obtaining money or property by means of any untrue statement or material omission) in connection with the offer or sale—are satisfied. Additionally, Speer was charged not only with primary violations of the securities-fraud statutes, but also with aiding and abetting such violations, which allows for punishment as a principal. See 18 U.S.C. § 2. Speer's securities-fraud convictions can be upheld on this ground if some other party had committed a securities-law violation, and if Speer "had general awareness that his role was part of an overall activity that [was] improper, and if [he] knowingly and substantially assisted the violation." S.E.C. v. Coffey, 493 F.2d 1304, 1316 (6th Cir.1974). Here, at least one NCFE principal committed securities fraud in authorizing the bond issuances, and a rational trier of fact could have found that Speer knew that his role in signing the certificates was part of an overall fraudulent scheme. It is also undisputed that the bonds could not have been issued (and the three instances of securities fraud would not have occurred) without the signed incumbency certificates.
Petitioner's allegations of prosecutorial misconduct are readily apparent from the face of the record and should have been raised on direct appeal, but were not. Claims that were or could have been raised on direct appeal may not be raised in a motion to vacate, set aside, or correct sentence under 28 U.S.C. § 2255. Regalado v. United States, 334 F.3d 520, 528 (6th Cir. 2003). A motion to vacate sentence under § 2255 may not serve as a substitute or a supplementary proceeding for a direct appeal. See United States v. Frady, 456 U.S. 152, 165 (1982). A defaulted claim cannot be raised on a § 2255 motion unless a petitioner can demonstrate "cause" for each failure to raise the claim and "actual prejudice" resulting from the error. Murry v. Carrier, 477 U.S. 478, 485 (1986). Petitioner does not meet this standard here.
As cause for failing to raise the issue of prosecutorial misconduct on direct appeal, Petitioner asserts the ineffective assistance of appellate counsel. To establish a claim of ineffective assistance of counsel, a defendant must show both of the following: (1) counsel's performance was unreasonable because he or she "made errors so serious that counsel was not functioning as the 'counsel' guaranteed the defendant by the Sixth Amendment" and (2) the deficient performance prejudiced the defendant. Strickland v. Washington, 466 U.S. 668, 687 (1984). "When a convicted defendant complains of ineffectiveness of counsel's assistance, the defendant must show that counsel's representation fell below an objective standard of reasonableness." Id. at 687-88. "Judicial scrutiny of counsel's performance must be highly deferential." Id. at 689. "[A] court must indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action 'must be considered sound [ ] strategy." Id. "To establish prejudice, Petitioner must show a reasonable probability that, but for his attorney's errors, the proceedings would have produced a different result." Ross v. United States, 339 F.3d 483, 492 (6th Cir. 2003).
The Strickland test applies to appellate counsel. Burger v. Kemp, 483 U.S. 776 (1987). Counsel must provide reasonable professional judgment in presenting the appeal. Evitts v. Lucey, 469 U.S. 387, 396-97 (1985). " '[W]innowing out weaker arguments on appeal and focusing on' those more likely to prevail, far from being evidence of incompetence, is the hallmark of effective appellate advocacy." Smith v. Murray, 477 U.S. 527, 536 (1986) (quoting Jones v. Barnes, 463 U.S. 745, 751-52 (1983)).
In Mapes v. Coyle, 171 F.3d 408, 427-28 (6th Cir. 1999), the United States Court of Appeals for the Sixth Circuit outlined factors for consideration in an ineffective assistance of appellate counsel claim:
(1) Were the omitted issues "significant and obvious"?
(2) Was there arguably contrary authority on the omitted issues?
(3) Were the omitted issues clearly stronger than those presented?
(4) Were the omitted issues objected to at trial?
(5) Were the trial court's rulings subject to deference on appeal?
(6) Did appellate counsel testify in a collateral proceeding as to his appeal strategy and, if so, were the justifications reasonable?
(7) What was appellate counsel's level of experience and expertise?
(8) Did the petitioner and appellate counsel meet and go over possible issues?
(9) Is there evidence that counsel reviewed all the facts?
(10) Were the omitted issues dealt with in other assignments of error?
(11) Was the decision to omit an issue an unreasonable one which only an incompetent attorney would adopt?
Id.
None of the evidence Petitioner complains of was improper. Contrary to Petitioner's allegation here, the Superseding Indictment charged him with improperly advancing investor funds to healthcare providers. Superseding Indictment, Doc. #257, ¶¶16.1, 17.2, 24-32, 33. Additionally, nothing in the record supports Petitioner's allegation that the government presented false evidence from a false witness. Testimony summarizing Petitioner's compensation was properly admitted. See Rule 1006, Federal Rules of Evidence. As noted by Respondent, the United States Court of Appeals for the Sixth Circuit concluded that the testimony of Bernard Woolfley, the prosecution witness apparently referred to by Petitioner, was properly admitted at trail in rejecting the appeal of co-defendant Roger Faulkenberry:
Rule 1006 of the Federal Rules of Evidence provides:
Rule 1006. Summaries to Prove Content
The proponent may use a summary, chart, or calculation to prove the content of voluminous writings, recordings, or photographs that cannot be conveniently examined in court. The proponent must make the originals or duplicates available for examination or copying, or both, by other parties at a reasonable time and place. And the court may order the proponent to produce them in court.
[P]rosecution witness Bernard Woolfley. . . presented summary evidence regarding the compensation paid to NCFE's executives and the amount of advances wired to certain providers in which NCFE's principals had an ownership interest. Woolfley was not designated as an expert in the case. Faulkenberry's argument is that Woolfley's testimony should have been excluded, because it was based upon specialized knowledge and thus expert in nature. See Fed.R.Evid. 702. We review the admission of this testimony for an abuse of discretion. United States v. Jamieson, 427 F.3d 394, 409 (6th Cir.2005).United States v. Faulkenberry, 614 F.3d 573, 588-89 (6th Cir. 2010). Moreover, the Court permitted Petitioner ample cross examination to bring out the issues he complains of here now.
Lay testimony "results from a process of reasoning familiar in everyday life, whereas an expert's testimony results from a process of reasoning which can be mastered only by specialists in the field." United States v. White, 492 F.3d 380, 401 (6th Cir.2007)
(internal quotation marks omitted). Woolfley presented lay testimony here. Although he summarized a large amount of data, that task required only everyday reasoning rather than specialized knowledge. Moreover, Woolfley did not go on to offer any conclusions as to what the data meant: "I have not made any independent determinations as to what is an eligible receivable or what is an ineligible receivable. The extent of my analysis has been to take the data that is in the funding system and summarize it." So we reject this argument.
Faulkenberry also argues that Woolfley's testimony was improper because it was based upon documents not admitted into evidence. A district court may admit summary evidence under Rule 1006, however, without admitting the underlying documents upon which the testimony is based. See United States v. Bray, 139 F.3d 1104, 1111 (6th Cir.1998). Indeed, "the point of Rule 1006 is to avoid introducing all the documents." United States v. Hemphill, 514 F.3d 1350, 1359 (D.C.Cir.2008) (emphasis added). So we reject this argument as well.
Petitioner has failed to establish cause and prejudice for his procedural default for claim one.
Violation of Federal Rules of Evidence:
In claim two, Petitioner generally complains that the prosecution improperly used summary witnesses to present summary and false evidence. Although Petitioner's argument in support of this claim is tediously lengthy, it nonetheless fails to identify the witness(es) he refers to or the specific portions of the trial transcripts at issue. This Court need not scour through the voluminous record in this case to ascertain the basis for Petitioner's claim. Uduko v. Cozzens, No. 11-13765, 2012 WL 5830217, at *5 (E.D. Mich. Sept. 21, 2012)(citing Little v. Cox's Supermarkets, 71 F.3d 637, 641 (7th Cir. 1995)("[A] court need not make a party's case by scouring the various submissions to piece together appropriate arguments.") See also InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989)(same). The Court will not do so here.
To the extent Petitioner is referring to the testimony of Bernard Woofley, as discussed, the United States Court of Appeals in United States v. Faulkenberry, 614 F.3d 573, 588-89 (6th Cir. 2010), has already rejected this argument. Id.
Claim two is without merit.
Ineffective Assistance of Counsel:
In claim three, Petitioner asserts he was denied effective assistance of counsel because his attorney improperly permitted admission of "biased and prejudicial information," PageID# 25252, by witnesses without first had knowledge of the subject matter. Again, he asserts that false witness presented false evidence and defense counsel improperly permitted evidence committed in violation of the Federal Rules of Evidence that terminated this Court's jurisdiction, and permitted evidence outside the scope of the Superseding Indictment.
For the reasons already discussed, this claim plainly lacks merit. Petitioner's allegations are general, without support, or already have been rejected by the United States Court of Appeals for the Sixth Circuit.
Claim three is without merit.
In summary, Petitioner's requests for discovery, Docs. # 1166, 1167, 1168, 1179, 1171, 1166-68, 1171, 1178, 1179, all are DENIED.
Respondent's motion to quash subpoenas, Docs. # 1195, 1198, are GRANTED.
Petitioner's motions to expand the record, Docs. # 34, 1235,1236, 1242; 1242, 1246; 1249; 1269; 1271, 1272; 1276; 1278; and 1280, all are DENIED.
Petitioner's motions for reconsideration, Docs. # 1266, 1268, are DENIED.
The Magistrate Judge concludes that none of Petitioner's claims provide a basis for federal habeas corpus relief and therefore RECOMMENDS that this action be DISMISSED.
Procedure on Objections:
If any party objects to this Report and Recommendation, that party may, within fourteen (14) days, file and serve on all parties a motion for reconsideration by the Court, specifically designating this Report and Recommendation, and the part thereof in question, as well as the basis for objection thereto. 28 U.S.C. § 636(b)(1)(B); Rule 72(b), Fed.R.Civ.P.
The parties are specifically advised that failure to object to the Report and Recommendation will result in a waiver of the right to de novo review by the District Judge and waiver of the right to appeal the judgment of the District Court. Thomas v. Arn, 474 U.S. 140, 150-52, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); United States v. Walters, 638 F.2d 947 (6th Cir.1981). See also, Small v. Secretary of Health and Human Services, 892 F.2d 15, 16 (2d Cir.1989).
Mark R. Abel
United States Magistrate Judge