United States v. Davis

1

UNITED STATES OF AMERICA, v. DARAYL D. DAVIS,

No. 23 CV 3620

United States District Court, N.D. Illinois, Eastern Division

November 27, 2023

MEMORANDUM OPINION & ORDER

Robert W. Gettleman United States District Judge

Petitioner Darayl D. Davis brings the instant motion to vacate, set aside, or correct his sentence for ineffective assistance of counsel pursuant to 28 U.S.C. § 2255. For the reasons discussed below, petitioner's motion (Doc. 1) is denied.

BACKGROUND

On June 26, 2018, petitioner was charged in a sixteen-count superseding indictment with: five counts of wire fraud in violation of 18 U.S.C. § 1343; four counts of mail fraud in violation of 18 U.S.C. § 1341; one count of aggravated identity theft in violation of 18 U.S.C. § 1028A(a)(1); and six counts of engaging in monetary transactions in property derived from unlawful activity in violation of 18 U.S.C. § 1957. These charges arose from petitioner's creation, promotion, and operation of a complex multi-state scheme to defraud individuals who trusted him to place their funds in safe investments. Petitioner's victims lost approximately $5,143,649 over the course of approximately twenty years.

The parties began plea negotiations after petitioner's trial was continued due to the COVID-19 pandemic. The parties set a change of plea date during a telephonic status hearing with petitioner on the line. When questioned by the court, one of petitioner's counsel, Damon Cheronis (“Cheronis”), stated that it would be agreeable to conduct the plea colloquy by telephone. Petitioner did not object. On September 24, 2020, the court entered a written order regarding the scheduled change of plea pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), § 15002(b)(2)(A), Pub. L. No 116-136, 134 Stat. No. 21-1854, 281 (2020). The plea hearing was reset for January 19, 2021, after the parties twice requested that the court reset the date. Petitioner did not object to the telephonic format of the change of plea date in any of these instances.

On January 19, 2021, petitioner pled guilty to count six of the superseding indictment (mail fraud) pursuant to a written plea agreement. Before proceeding, Cheronis confirmed with the court that he had discussed the matter with petitioner and they again agreed to proceed via telephone pursuant to the CARES Act. The court informed petitioner that petitioner could stop the proceedings to consult with his counsel “for any reason at all,” and petitioner acknowledged that he understood. After petitioner was placed under oath, he acknowledged that he had time to talk with his lawyers, told them everything that he knew about the case and was satisfied with counsel's efforts on his behalf.

Petitioner acknowledged that he received a copy of the plea agreement and “extensively” discussed it with his attorneys before signing it. He agreed that he understood that the court would not determine the appropriate guidelines range for petitioner's sentence until the court received the presentence investigation report (“PSR”) and the parties' sentencing memoranda. Petitioner also acknowledged that he understood that the court could impose a sentence that was greater or lesser than the guidelines range, and if the court imposed a sentence that was higher, greater, or harsher than he hoped for, petitioner would have no right to withdraw his guilty plea. Petitioner admitted that he waived his right to appeal his sentence with narrow exceptions.

The plea agreement provided that the government would dismiss the fifteen other counts and forfeiture allegation in exchange for an appellate waiver. It outlined the preliminary sentencing guidelines calculations, which included:

a. an 18-level increase in the base offense level pursuant to Guideline § 2B1.1(b)(1)(J) because the loss amount was more than $3,500,000 but less than $9,500,000;

b. a two-level increase pursuant to Guideline § 2B1.1(b)(2)(A)(i) because the offense involved 10 or more victims;

c. a two-level increase pursuant to Guideline § 2B1.1(b)(10)(C) because the offense involved sophisticated means and petitioner intentionally engaged in the conduct constituting sophisticated means;

d. a four-level increase pursuant to Guideline § 2B1.1(b)(20)(A) because the offense involved a violation of securities law and at the time of the offense petitioner was an investment advisor, and e. a two-level increase pursuant to Guideline § 3A1.1(b)(1) because the offense involved a person that petitioner knew or should have known was a vulnerable victim.

Petitioner and his counsel took no position on the application of these enhancements at the time of his plea, including the loss amount, and reserved the right to present argument about them at sentencing. Counsel stated that petitioner was “fully advised that it will be Your Honor who decides whether the enhancements apply and what the final loss amount number is.”

The government verbally presented the factual basis for count six, as laid out in the written agreement, and petitioner admitted that he had committed the described conduct. Petitioner admitted that he held out his companies, Financial Assurance Corporation (“FAC”) and Affluent Advisory Group (“AAG”) as “investment firms that provided investment advisory services and offered investment opportunities.” Petitioner admitted that he knowingly made materially false representations to investors about purported investments to induce investors to transfer funds to FAC and AAG, including that they would receive “guaranteed protection against the loss of their principals and fixed annual interest payments,” and some of these investments were backed by or affiliated with a large, multinational insurance company.

Petitioner also admitted that he knowingly created and provided to investors false and fraudulent investment documents, including fake product and policy overviews, fictitious growth projections, fake contracts that outlined the purported terms of the non-existent investments, and false account statements that purported to show account growth from guaranteed interest payments. Petitioner admitted that he used fraudulently obtained funds from investors to make payments to other investors, and he often falsely represented that these payments were interest payments or repayments of principal. When investors sought to withdraw funds or requested that he return their principal investments, petitioner falsely represented that he did not have funds available to liquidate their funds or refund their money.

In pleading guilty to count six, which the plea agreement describes as “part of the scheme to defraud,” petitioner admitted under oath that he caused Victim Investor D (later identified as Sabrina Black (“Black”)) to invest approximately $192,000 into an FAC account. He admitted that he knowingly falsely represented to Black that her investment funds would be held in the custody of a large, multinational insurance company, and her investment offered guaranteed protection against financial loss and annual interest payments. Petitioner admitted that he voluntarily pled guilty because he was guilty of the charged conduct.

Petitioner, however, states that he was advised that he would receive a sentence that was below the guidelines range, and his counsel would challenge the sentencing enhancements as a matter of law. According to petitioner, he was willing to plead guilty to count six in exchange for dismissal of the remaining counts and the aggravated identity theft charge being set for trial. Later, the government agreed to dismiss the identity theft charge, which would have required a mandatory two-year consecutive sentence, if plaintiff agreed to an appellate waiver. Petitioner states that, regarding the aggravated identity theft charge, his counsel told him that they would not “have to deal with it at all” and it would be “off the table,” although the other counts “could still be used as relevant conduct for sentencing purposes.”

Following petitioner's plea, a probation officer determined in the PSR that petitioner's total offense level was 36, his criminal history category was I, and the guideline range was 188 to 235 months imprisonment. In determining the total offense level, the probation officer found that the base offense level was seven, pursuant to United States Sentencing Guidelines (“USSG”) § 2B1.1(a)(1), and the base offense level was increased by the above-listed enhancements, although probation included a four-level enhancement for substantial financial hardship pursuant to USSG § 2B1.1(b)(2)(B) instead of the two-level enhancement for more than ten victims, and also a two-level enhancement for using Melvin Thomas's (“Thomas's”) personal identification information, without his knowledge or permission, to obtain a credit card for unauthorized purchases, pursuant to USSG § 2B1.1(b)(11)(C)(i). The base offense level was reduced by three points for acceptance of responsibility pursuant to USSG § 3E1.1(a), (b).

Petitioner countered that the total offense level should be 26, with a guidelines range of 63 to 78 months imprisonment. Petitioner objected to the PSR's sua sponte application of the substantial financial hardship enhancement, in addition to the enhancements for sophisticated means, use of Thomas's personal identifiers, and violations of securities law. Further, petitioner's counsel argued that the 18 U.S.C. § 3553 factors supported a below-guidelines sentence due to petitioner's contrition and acknowledgement of the harm to victims. Petitioner also countered the government's sentencing memorandum, which discussed petitioner's “extravagant” personal expenditures and whether his clients signed promissory notes that promised that he would “invest”...