United States v. Moates

          MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          HONORABLE MARK E. FORD, UNITED STATES MAGISTRATE JUDGE

         Before the Court is the Defendant's Motion Under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody filed July 16, 2018 (ECF No. 42) and his Amended Motion filed on July 30, 2018 (ECF No. 46). The United States filed its response on August 28, 2018. (ECF No. 51). Petitioner filed a reply on January 2, 2019. (ECF No. 56). The matter is ready for Report and Recommendation.

         I. Background

         On May 11, 2016, Defendant, William Jackson Moates, Jr. (“Moates”), was named in a 25-count Indictment charging him with 13 counts of wire fraud (Counts 1, 3, 4, 5, 6, 8, 9, 10, 11, 15, 17, 18 and 23); seven counts of money laundering (Counts 2, 7, 14, 16, 19, 21 and 22); one count of theft concerning programs receiving federal funds (Count 12); two counts of mail fraud, aided and abetted by each other and others (Counts 13 and 20); one count of theft or embezzlement from an employee benefit plan (Count 24); and, one count of bank fraud (Count 25). (ECF No. 1).

         Moates was arrested on May 13, 2016. (ECF No. 11). He appeared for arraignment with his retained counsel, Rex W. Chronister (“Chronister”), on May 16, 2016, at which time he entered a not guilty plea to each count of the Indictment. (ECF No. 6). Chronister requested discovery in open court, and Moates was released on a signature bond and conditions of release. (ECF Nos. 6, 7, 8).

         On October 11, 2016, Moates appeared with counsel before the Hon. P. K. Holmes, III, Chief U.S. District Judge, for a change of plea hearing. (ECF No. 14). A written Plea Agreement (ECF No. 15) was presented to the Court, and Moates pleaded guilty to Counts 5, 11, 12, 13, 14 and 24 of the Indictment. (ECF No. 14). The Court found that Moates' guilty pleas were voluntary, supported by a factual basis, and the pleas were accepted. (Id.). The Court reserved approval of the Plea Agreement pending completion of a Presentence Investigation Report (“PSR”). (Id.).

         An Initial PSR was prepared by the United States Probation Office on April 27, 2017. (ECF No. 18). On May 10, 2017, the Government advised that it had numerous objections to the Initial PSR, and these were principally related to the amount of actual loss suffered by Moates' victims or the amount of intended loss. (ECF No. 20). On May 11, 2017, Chronister submitted 13 objections to the Initial PSR on Moates' behalf. (ECF No. 22). Moates' objections concerned factual matters, the amount of actual loss, application of a sentencing enhancement for vulnerable victims, and that he intended to seek a downward variance based on health issues. (Id.).

         On May 26, 2017, a Final PSR was submitted to the Court. (ECF No. 23). In an Addendum, U.S. Probation noted resolution, or no changes made, as to all objections. (ECF No. 23-1).

         The Final PSR determined that Moates is accountable for an actual loss to his victims in the total amount of $5, 710, 816.62. (ECF No. 23, ¶ 159). It was noted: “the overwhelming information in this case would likely have resulted in an intended loss to exceed $8, 000, 000. However, the probation office believed that the actual loss in the sum of $5, 710, 816.62 was undeniably a conservative estimate as to the loss Moates should be held accountable for, but also representative of a readily provable figure.” (Id., ¶ 162). It was also reported that the actual loss figure as determined by the probation office falls within the stipulated loss agreed to by the parties in the Plea Agreement. (Id., ¶ 163; ECF No. 15, ¶ 19).

         Moates' Base Offense Level was determined to be 7 pursuant to U.S.S.G. § 2B1.1(a)(1). (ECF No. 23, ¶ 177). The $5, 710, 816.62 actual loss to victims resulted in an 18-level enhancement.^[1](Id., ¶ 178). As the offenses involved a substantial financial hardship to five or more victims, a 4-level enhancement was applied. (Id., ¶ 179). A 2-level adjustment was made because the offenses involved sophisticated means and Moates intentionally engaged in or caused the conduct constituting sophisticated means. (Id., ¶ 180). Since Moates was convicted of money laundering under 18 U.S.C. § 1957, a 1-level increase applied. (Id., ¶ 181). Because Moates knew or should have known that a victim of the offense was a vulnerable victim, a 2-level enhancement was added. (Id., ¶ 182). Finally, Moates had abused a position of private trust in a manner that significantly facilitated the commission or concealment of the offenses, so another 2-level enhancement was applied. (Id., ¶ 183). These enhancements resulted in an Adjusted Offense Level of 36. (Id., ¶ 185). After a 3-level reduction for acceptance of responsibility, Moates' Total Offense Level was determined to be 33. (Id., ¶¶ 187-189). Moates had no criminal history, so his criminal history score of zero placed him in Criminal History Category I. (Id., ¶ 201).

         The statutory maximum term of imprisonment for the counts of conviction are: 20 years each for Counts 5 and 11; 10 years for Count 12; 20 years for Count 13; 10 years for Count 14; and, 5 years for Count 24. Therefore, the total maximum term of imprisonment is 85 years. (Id., ¶ 250). Based upon a Total Offense Level of 33 and a Criminal History Category of I, the advisory guidelines sentencing range was 135 to 168 months imprisonment. (Id., ¶ 251).

         Chronister filed a Sentencing Memorandum on June 7, 2017. (ECF No. 25). In it, he argued the “vulnerable victims” enhancement should not apply, that a downward variance was warranted due to Moates' rare health condition, and he suggested a sentence of six years (72 months) imprisonment was sufficient but not greater than necessary to comply with the goals of sentencing.

         Moates appeared for sentencing on June 28, 2017. (ECF No. 27). Upon inquiry, Moates stated that he was satisfied with the representation and advice of his counsel. (Id., p. 1; ECF No. 49, p. 5). The Court confirmed that Moates had an opportunity to review and read the PSR and discuss it with his counsel. (Id.). The PSR was reviewed in open court, and the Court found that given the range in U.S.S.G. § 2B1.1, “whether the Court used the actual loss or the intended loss, the Guideline calculation would be the same.” (ECF No. 49, p. 6). Addressing Moates' first five objections to the PSR, the Court clarified that Moates' only objection was one of timing^[2], and the Court concluded, “[s]o if it's only a question of timing, it doesn't appear to be an objection the Court needs to rule on, ” to which Chronister agreed. (Id., p. 8). To the extent there was an objection that needed to be ruled on, the Court overruled the objection. (Id.). The Court determined that Moates' objection No. 7 to the PSR did not affect the Guidelines calculation, and Chronister agreed. (Id., pp. 8-9). Next, Moates' objection to the vulnerable victim enhancement was discussed and argued, with the Court finding that the enhancement applied and overruling Moates' objection. (Id., pp. 9-14).

         Government's Exhibit 1, being a letter from Dr. TeCora Ballom, Rear Admiral for the U.S. Public Health Service, Federal Bureau of Prisons, regarding the BOP's ability to treat Moates' medical condition was received in evidence. (Id., p. 14).

         The Government then presented testimony from Steve Williams, a forensic accountant with the FBI, in support of showing where the fraudulently obtained funds went. (Id., pp. 14-39). To summarize Mr. Williams' testimony, he explained that Moates used the fraudulently obtained funds for his own personal benefit in various ways, including: payment of personal taxes; a remodel of his home and office; payment of medical expenses; payment of his mortgage (and rent during the remodel); ATM withdrawals; purchase of jewelry; travel (a cruise and a trip to Africa); other personal purchases (Amazon and iTunes); payments made to close family members; and, other checks and transfers payable to himself or his wife. The total of these personal expenditures was just over $2, 000, 000. (Id., pp. 32-33). Mr. Williams also related that approximately $3, 500, 000 of fraudulently obtained client funds went back in to Moates' business, including credit card payments of over $500, 000, and payments to other investors who were defrauded and whose money was never invested. (Id., pp. 18, 36-37). Moates presented no rebuttal evidence. (Id., p. 39).

         The Court then adopted the PSR without changes and as supplemented to the extent that the testimony of Mr. Williams described what happened to the funds that were obtained through the counts of conviction. (Id., pp. 39-40). The Court also expressed final approval of the Plea Agreement. (Id., p. 40). Victim impact statements were received, and several victims addressed the Court at sentencing. (Id., pp. 45-56).

         The Government “[did] not doubt that [Moates'] use and likely abuse of prescription pain medication lowered his inhibitions to commit these crimes and helped him escape from the reality of what he was doing, ” but it argued that Moates' pride and greed were the motivating factors behind his criminal conduct, and it was noted that letters of support from Moates' closest family members expressed the view that he was innocent and the scapegoat of some wider conspiracy. (Id., pp. 58- 60). The Court also recognized this, stating “the Court is somewhat bothered by statements of people who don't acknowledge the criminal conduct that the Defendant pled guilty to.” (Id., p. 60).

         Chronister argued that Moates “took the wrong path, ” but that “there was a meeting with family members of the victims^[3] who were aware of all of this happening that encouraged Mr. Moates to take the path he took.” (Id., p. 65). Chronister also raised the issue of Moates' use of prescription pain medications, arguing that Moates' inhibitions may have been impaired. (Id., p. 66). An argument for a downward variance because of Moates' health condition was made. (Id.).

         Choosing to exercise his right to allocution, Moates stated, “I accept the responsibilities for this, ” but also “[t]his is not me, ” and “I don't remember all of it.” (Id., p. 67).

         Finding that the BOP is capable of taking care of Moates' medical condition, the Court concluded that a downward variance because of Moates' medical condition was inappropriate. (Id., p. 69). Turning to the nature and circumstances of the offense, the Court commented that “this is some of the most reprehensible, fraudulent conduct I have seen.” (Id.). The Court noted that Moates “used religion to gain the trust of a lot of investors, ” and “these are people without means who now have nothing.” (Id., pp. 69-70). It was also noted that the offense conduct occurred over a period of four years; that it even “turned into a Ponzi scheme” where Moates would take money from investors and give it to other investors; and, that two weeks after his arrest Moates filed personal bankruptcy and “some of the victims are listed as unsecured creditors ... which really, really somewhat astounds me.” (Id., pp. 70-71). The need to reflect the seriousness of the offense and to deter other similar criminal conduct were also referred to by the Court in support of a Guidelines sentence. (Id., p. 71). The Court then imposed a Guidelines sentence of 150 months imprisonment on Counts 5, 11, and 13, a term of 120 months imprisonment on Counts 12 and 14, and a sentence of 60 months on Count 24, all to run concurrently. (Id., p. 73). Three years supervised release was imposed on each count of conviction, all to run concurrently. (Id.). No. fine was imposed “because if there is any monies available, it ought to go towards the payment of restitution, ” which was ordered in the amount of $5, 710, 816.62, and $600.00 in special assessments were ordered. (Id., p. 75).

         Upon imposition of sentence, the Court advised Moates of his appellate rights, including the right to appeal in forma pauperis. (Id., pp. 76-77).

         Judgment was entered by the Court on June 28, 2017. (ECF No. 29). Moates did not pursue a direct appeal from the Judgment.

         On July 16, 2018, Moates filed his pro se Motion Under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody (the “motion”). (ECF No. 42). The motion was incomplete and was not signed by Moates under penalty of perjury, so on July 17, 2018 an Order was entered directing Moates to complete and file the standard form § 2255 motion on or before August 17, 2018. (ECF No. 44). On July 30, 2018, Moates filed his completed motion under § 2255. (ECF No. 46). He declared under penalty of perjury that his motion was placed in the prison mailing system on July 10, 2018, but the hand-written date of execution is shown as July 11, 2018. (Id., p. 14).

         The motion, as amended, raises four grounds for relief, which are summarized as follows:

         Ground One: Ineffective assistance of counsel prior to change of plea, including counsel's failure to investigate Moates' claims, to review the entire discovery, and to review applicable law; failure to file a motion to suppress the evidence seized by the Government; and, failure to investigate Moates' claims of diminished capacity. (Id., pp. 4-6).

         Ground Two: Ineffective assistance of counsel prior to the sentencing hearing. Moates claims he never received the discovery and computer records the Government promised him to prepare for sentencing, and that counsel never notified the Court of this. Moates also asserts that counsel failed to seek a departure due to Moates' diminished mental capacity. “Because of Attorney Chronister's actions I was not able to prove that I was not responsible for the amount of missing funds and that I qualified for a departure from my sentencing range.” (Id., p. 7).

         Ground Three: Ineffective assistance of counsel during the sentencing hearing. Moates claims his counsel “failed to notify the Court that the government had purposely erased the data that would have vindicated me or at a minimum lowered the loss amounts, ” and “failed to present evidence that would have supported a downward departure or variance of my sentence due to unwarranted disparity.” (Id., p. 8).

         Ground Four: Ineffective assistance of counsel after sentencing hearing. Moates alleges he asked counsel to file an appeal on his behalf, but that he was dissuaded from an appeal by counsel because of the costs involved; that “Chronister never told me that I could have obtain (sic) In Forma Pauperis status with the Court and not be required to pay up front for my appeal”; and, that “I would have appealed my case had Attorney Chronister informed me that I could appeal without prepayment.” (Id., p. 10).

         The United States' response to the motion, as amended, was filed on August 28, 2018. (ECF No. 51). Moates filed a reply on January 2, 2019. (ECF No. 56).

         II. Discussion

         “A prisoner in custody under sentence . . . claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence.” 28 U.S.C. § 2255(a). “If the court finds that the judgment was rendered without jurisdiction, or that the sentence imposed was not authorized by law or otherwise open to collateral attack, or that there has been such a denial or infringement of the constitutional rights of the prisoner as to render the judgment vulnerable to collateral attack, the court shall vacate and set the judgment aside and shall discharge the prisoner or resentence him or grant a new trial or correct the sentence as may appear appropriate.” 28 U.S.C. § 2255(b). A thorough review of Moates' Motion, as amended, and the files and records of this case conclusively shows that Moates is not entitled to relief, and it is recommended that his Motion, as amended, be dismissed with prejudice without an evidentiary hearing.

         A. Timeliness

         A one year period of limitation applies to motions under 28 U.S.C. § 2255. This period runs from the latest of: (1) the date on which the judgment of conviction becomes final; (2) the date on which the impediment to making a motion created by governmental action in violation of the Constitution or laws of the United States is removed, if the movant was prevented from making a motion by such governmental action; (3) the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review; or, (4) the date on which the facts supporting the claim or claims presented could have been discovered through the exercise of due diligence. 28 U.S.C. § 2255(f).

         The United States has not raised the issue of timeliness in its Response, but the circumstances present in the record cause concern regarding whether Moates' § 2255 Motion is timely.

         Based upon the allegations contained in Moates' § 2255 Motion, the operative date in this case is “the date on which the judgment of conviction becomes final.” 28 U.S.C. § 2255(f)(1). Moates' Judgment was entered on June 28, 2017. (ECF No. 29). Had Moates wished to file an appeal, he was required to do so within 14 days. See Fed. R. App. P. 4(b)(1)(A)(i). Moates did not file an appeal, and his judgment of conviction thus became final on July 12, 2017. See Murray v. United States, 313 Fed.Appx. 924 (8th Cir. 2009). From that date, Moates had one year, or until July 12, 2018, to timely file a § 2255 habeas petition.

         Application of the “prison mailbox rule” could place the filing of Moates' § 2255 Motion within the one-year limitations period.

         Rule 3(d) of the Rules Governing Section 2255 Proceedings provides the following:

“A paper filed by an inmate confined to an institution is timely if deposited in the institution's internal mailing system on or before the last day for filing. If an institution has a system designed for legal mail, the inmate must use that system to receive the benefit of this rule. Timely filing may be shown by a declaration in compliance with 28 U.S.C. § 1746 or by a notarized statement, ...