United States v. Thomas

United States of America, Plaintiff, v. Douglas Ray Thomas Defendant.

Criminal No. 18-218 (JNE/LIB)

Civil No. 21-107 (JNE)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

April 29, 2021

ORDER

This matter is before the Court on Defendant's Motion to Vacate, Set Aside, or Correct his Sentence Pursuant to 28 U.S.C. § 2255. ECF No. 74. The Government opposes Defendant's motion. ECF No. 86. For the reasons stated below, the Court denies Defendant's motion without an evidentiary hearing and does not issue a certificate of appealability.

BACKGROUND

Defendant fraudulently induced the former owners of Northwoods Trucking, Inc. ("NWT") into selling him the company. Defendant misrepresented his financial condition and purchased all outstanding shares of NWT for $730,000. He did not comply with his obligations under the purchase agreement, but instead began extracting revenue to use for his personal expenses. When NWT's prior owners, the victims of Defendant's offense, realized what was happening, they attempted to intercept NWT's revenue and keep NWT afloat, but to no avail.

A grand jury charged Defendant with six counts of wire fraud and two counts of failure to account for and pay over employment taxes. Defendant ultimately pleaded guilty to one count of wire fraud and one count of failure to account for and pay employment taxes. Defendant's plea agreement noted the parties disagreed on the loss amount. The Government believed the intended loss amount was between $550,000 and $1,500,000, increasing the offense level by fourteen points. Defendant reserved the right to argue for a lower loss amount.

The Presentence Investigation Report ("PSR") found that the loss amount was $730,000, falling within the range that increased the offense level by fourteen points. The PSR considered the fact that Defendant paid some of NWT's liabilities, but found these payments did not warrant credit because they did not reimburse the victims. Defense counsel filed objections to the PSR. Though counsel did not explicitly object to the loss amount calculations in the PSR, he objected to a paragraph describing the offense conduct. Counsel pointed out that the PSR did not mention the rent Defendant paid to the victims, the value of the services Defendant rendered in running NWT, or the value of the assets returned to the victims after NWT was shut down.¹ Defense counsel also filed supplemental documents and information for consideration with the PSR. These documents included evidence of the victims' attempts to intercept NWT's revenue to keep the company in business.²

In its sentencing position pleading, the Government argued that the loss amount was $730,000. Defense counsel argued for leniency under the general sentencing factors in 18 U.S.C. § 3553(a).

At the sentencing hearing, the Government credited Defendant with two repayments, lowering the loss amount to $634,665. This loss amount was still within the original, contemplated loss range which increased the offense level by fourteen points. Defense counsel stated there were no objections to the calculations in the PSR and the Court subsequently adopted the PSR guideline calculations. The recommended imprisonment sentence was between forty-one and fifty-one months.

Defense counsel then focused his oral arguments on the restitution amount and the general sentencing factors.

The Court sentenced Defendant to fifty-one months' imprisonment to be followed by a two-year term of supervised release. The Court noted that while it granted Defendant the points for acceptance of responsibility, it did so reluctantly.

DISCUSSION

A federal prisoner may move to vacate, set aside, or correct his sentence under 28 U.S.C. § 2255. Ineffective assistance of counsel claims are properly raised through § 2255 motions. See Massaro v. United States, 538 U.S. 500, 509 (2003); United States v. Ramirez-Hernandez, 449 F.3d 824, 826-27 (8th Cir. 2006). However, "[a] defendant 'faces a heavy burden' to establish ineffective assistance of counsel pursuant to section 2255." Deroo v. United States, 223 F.3d 919, 925 (8th Cir. 2000) (quoting United States v. Apfel, 97 F.3d 1074, 1076 (8th Cir. 1996)).

I. Ineffective Assistance of Counsel

Criminal defendants, with some exceptions, are entitled to effective assistance of counsel under the Sixth Amendment. U.S. Const. amend. VI; Strickland v. Washington, 466 U.S. 668, 685 (1984). To prevail on an ineffective assistance of counsel claim, a defendant must meet a two-part test. Strickland, 466 U.S. at 687. Courts do not have to evaluate both parts of the Strickland test if a defendant fails to establish one. Deroo, 223 F.3d at 925.

First, a defendant must show counsel's performance was deficient. Id. "Judicial scrutiny of counsel's performance must be highly deferential." Strickland, 466 U.S. at 689. There is a "strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance." Id.

Second, a defendant must show that counsel's deficient performance prejudiced the defense. Id. at 687. Specifically, a defendant must establish a reasonable probability that the result of the proceeding would have been different but for counsel's deficient performance. Id. at 694. "When a defendant is sentenced under an incorrect Guidelines range—whether or not the defendant's ultimate sentence falls within the correct range—the error itself can, and most often will, be sufficient to show a reasonable probability of a different outcome absent the error." United States v. Mulverhill, 833 F.3d 925, 930 (8th Cir. 2016) (quoting Molina-Martinez v. United States, 136 S. Ct. 1338, 1345 (2016)).

Here, Defendant argues that his former counsel unreasonably erred by failing to argue for a lower intended loss amount at sentencing, which would have led to a lower guidelines range. According to Defendant, the intended loss amount calculations should have included NWT's "misrepresented liabilities" and the "benefits" the victims obtained prior to the fraud's detection.

a. Performance

Defendant has not shown that his former counsel's performance was deficient. "Strategic choices made after thorough investigation of law and facts relevant to plausible options are virtually unchallengeable." United States v. Rice, 449 F.3d 887, 897 (8th Cir. 2006) (quoting Strickland, 466 U.S. at 690). Calkins v. United States, 795 F.3d 896 (8th Cir. 2015), presents an instructive example. The defendant in Calkins argued that her attorney should have contested the PSR's loss amount calculation instead of focusing on leniency under the § 3553(a) factors. 795 F.3d at 897. The court of appeals found that the defendant had "not met her burden of proving that her lawyer's actions were not a valid trial strategy." Id. at 898 (internal quotations omitted). The record showed that counsel had reviewed the government's evidence on the loss amount before recommending the defendant request leniency under § 3553(a). Id. at 897. The recommendation was based in part on the risk of the defendant losing a sentence reduction for acceptance of responsibility. Id.

Conversely, in Ryder v. Morris, defense counsel's failure to avail himself of the opportunities to discover evidence related to and rebutting the PSR may have constituted deficient performance. 752 F.2d 327, 332 (8th Cir. 1985) (citations omitted). A lawyer has a duty to "make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary." Id. (quoting Strickland, 466 U.S. at 691).

Here, defense counsel's decision to forgo arguing the loss amount was a strategic choice, not deficient performance. Like Calkins, the record shows counsel reviewed loss evidence before making a deliberate choice to pursue the leniency argument. 795 F.3d at 897. For example, counsel had reserved the right to argue for a lower loss amount in the plea agreement. Plea Agreement 5, ECF No. 43. Moreover, counsel submitted evidence concerning the loss amount to the Court. Notice of Def.'s Suppl. Docs., ECF No. 55. There was no failure to investigate as discussed in Ryder. 752 F.2d at 332.

Furthermore, focusing on restitution and § 3553(a) was a sound strategic choice given the benefits Defendant received and the benefits Defendant hoped to receive. Defendant obtained the acceptance of responsibility points despite the Court's reluctance. See Calkins, 795 F.3d at 897-98 (approving of counsel's choice to not "risk losing a reduction for acceptance of responsibility by disputing loss amount" (internal quotations and citation omitted)). It is also possible that the Court would have given Defendant an even higher sentence had defense counsel not focused on leniency. The Court sentenced Defendant at the top of the guideline range. The guideline range was determined in part by Defendant's criminal history score, which may have been understated. Defendant received a criminal history score of zero even though his criminal history included a conviction for fraud on a financial institution and there was evidence Defendant engaged in a similar fraudulent conduct with respect to five other businesses.

Because Defendant cannot establish counsel's deficient performance, his ineffective assistance of counsel claim fails. See Deroo, 223 F.3d at 925.

b. Prejudice

Even assuming Defendant could show that counsel's failure to argue the loss amount was an oversight, Defendant cannot establish a reasonable probability that he would have been sentenced under a lower guidelines range but for that oversight. See Strickland, 466 U.S. at 694; see also Thomas v. United States, 951 F.2d 902, 904 (8th Cir. 1991) (finding counsel's failure to raise a meritless argument cannot constitute ineffective performance). When calculating the loss amount, the Court uses "the greater of the actual loss or intended loss." U.S.S.G. § 2B1.1 cmt. n.3(A); United States v. Oligmueller, 198 F.3d 669, 671 (8th Cir. 1999). The intended loss "means the pecuniary harm that the...