Free Order on Motion for Release from Custody - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 Andrew Taylor, 13 Defendant. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Before the court is Defendant's second Motion for Release Pending Appeal (doc. # 154), the Government's Response (doc. # 155), and the Reply (doc. # 156). Defendant's 20 page Motion, filed August 15, 2006, requested expedited ruling but also attached his 46 page appeal brief, to which the Government has not yet responded in the Court of Appeals. The request for accelerated ruling is somewhat in tension with the attachment of Defendant's appeal brief. This court ought to have the Government's response brief on appeal to fully consider Defendant's contentions, but Defendant cannot by attaching his appeal brief to this motion force the Government to shorten its time to file its brief in the Court of Appeals. Rather than be compelled to file its appeal brief early, the Government relies on the failure to prove that Defendant will not be a danger to the safety of others. In these circumstances, the court does not take the Government's response as silently conceding that Defendant "raises a substantial question of law or fact likely to result in reversal or an order for a new trial." (Doc. # 156, p. 2.) The court will rule on the motion in light of these limitations.
Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

United States of America, Plaintiff, vs.

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CR 04-0809-PHX-NVW ORDER

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I.

Background Defendant was convicted of four counts of false declarations in a bankruptcy

proceeding, four counts of bankruptcy fraud, and one count of concealment of property in a bankruptcy proceeding, all arising out of successive filings of Chapter 13 petitions. By this multiple year pattern of conduct, Defendant exhausted various creditors and lived in a house owned by others without paying rent. Defendant's principal theme at trial was that he lacked the requisite intent for criminal liability. Defendant elected not to testify at trial. II. Danger to the Safety of Any Other Person or the Community This court found on the first motion for release pending appeal and finds again now that release is not warranted. Defendant has not shown "by clear and convincing evidence that he is not likely to pose a danger to the safety of any other person or the community." 18 U.S.C. § 3143(a)(1)(A). Defendant's second motion for release offers little that is new beyond the fact that Defendant has committed no new crimes between the time of the January 31, 2006 order denying his first motion for release and his self-surrender on March 7, 2006. The rest is re-argument. Defendant's showing still falls short of clear and convincing evidence to overcome the probative value of his financial dishonesty at various times in his life and, most significantly, in the prolonged events that are the subject of this proceeding. Defendant has exploited others repeatedly, and he has not shown by clear and convincing evidence that he now has acquired the conscience that will override opportunity and need as they arise in the future. This reason alone defeats Defendant's motion. III. Substantial Questions on Appeal A second requirement for release pending appeal is "that the appeal is not taken for the purpose of delay and raises a substantial question of law or fact likely to result in (i) reversal, (ii) an order for a new trial, (iii) a sentence that does not include a term of imprisonment, or (iv) a reduced sentence to a term of imprisonment less than the total of the time already served plus the expected duration of the appeal process." 18 U.S.C. § 3143(b)(1)(B). The court does not find the appeal taken for purpose of delay. A. Count Four -2Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 2 of 7

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The court has previously found Count Four to raise a debatable question of law. During his fourth bankruptcy hundreds of thousands of dollars were wired into his bank account. When the bankruptcy schedules were later amended, those assets were omitted. The facts had a compelling air of fraud. The assets were never disclosed, and they were used for investments and down payment on a house, with nothing paid to the creditors. But whether the bankruptcy laws required that disclosure when later filing amended schedules presents a "substantial question," though a technical one. 18 U.S.C. § 3143(b)(1)(B). United States v. Handy, 761 F.2d 1279 (9th Cir. 1985). At the January 31, 2006 hearing on Defendant's first motion for release pending appeal, this court so stated.1 Nevertheless, this court concluded then and concludes again now that that question does not suffice under 18 U.S.C. § 3143(b)(1)(B) because in no event would reversal on that ground alone affect conviction or the sentence. All the counts of conviction were grouped for sentencing purposes based largely on the total amount of harm or loss. Sentencing Guidelines § 3D1.2(d) and § 3D1.3(a); Presentence Investigation Report ¶ 24. The six level specific offense characteristic for a loss between $30,000 and $70,000 applies (which was reached by the Internal Revenue Service loss alone of $36,000). Sentencing Guidelines § 2B1.1(b)(1)(D); Presentence Investigation Report ¶ 26. Alternatively, the offenses would have been grouped under § 3D1.2(b), resulting in application of the guideline that has the highest offense level. Sentencing Guidelines § 3D1.3(a). Without Count Four, the Sentencing Guideline calculations and the highest offense level of other counts would have been the same. Defendant was sentenced to 33 months in prison on all counts, all counts to run concurrently. At sentencing the court was aware of this possibility and consciously sentenced Defendant the same as the court would have if Count Four were absent. At the January 31, 2006 hearing on the first motion for release pending

Contrary to Defendant's assertions in his Motion and in his appeal brief, this court's expressed concerns were about the legal sufficiency of Count Four, not about the legal sufficiency of all the Counts on which the jury was instructed or generally about "whether Taylor had any criminal liability in this matter." -3Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 3 of 7

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appeal, the court stated, "However, I do remember at sentencing thinking about that as a point of law and thinking that my sentence would have been the same whether Court 4 was in or out." (1-3-2006 Transcript, p. 49.) In such circumstances, reversal of some counts of conviction not affecting the sentence does not warrant vacating the sentence. United States v. De la Mata, 266 F.2d 1275, 1304-05 (11th Cir. 2001) ("For the reasons set forth above, we reverse appellants' convictions on counts 3 and 6, and sustain their convictions on all other counts. Because of the grouping prescribed by the sentencing guidelines, we find that the reversal of counts 3 and 6 does not alter in any way the sentences imposed.") Though Count Four may be reversed, there would not be a reversal, an order for a new trial, or a lower sentence within the meaning of 18 U.S.C. § 3143(b)(1)(B). The judgment of conviction and the same sentence would stand on the other eight counts. B. Other Issues Raised on Direct Appeal

Defendant also argues that the other issues raised on direct appeal are substantial, attaching his appeal brief. The court's prior conclusion, which has not changed, was that the Government presented substantial direct evidence of the materiality of Defendant's omissions from his bankruptcy filings and substantial evidence of his fraudulent intent. Defendant raises one issue on direct appeal that was not previously presented in this court. He argues that witness Bharat Lal committed perjury when testifying about legal fees he incurred in attempting to oust Defendant from an investment house he rented to Defendant. Mr. Lal testified at trial generally about the Defendant's bankruptcies and their effect in preventing eviction, including his incurring of substantial attorneys' fees in eviction proceedings. The court determined to allow some of Mr. Lal's attorneys' fees in the underlying eviction proceedings as restitution, but not other fees. At the restitution hearing for quantification of the allowed fees, the Government disclosed that it had just learned that some of the fees had been billed to a later buyer of the house because Mr. Lal had transferred the house. The significance of this discrepancy over when Mr. Bharat transferred the house -4Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 4 of 7

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is not obvious, for Defendant does not dispute that he dealt with Mr. Bharat throughout, that his purpose in one or more of the bankruptcies was to defeat eviction while not paying rent, and that he succeeded, whether Mr. Lal's role changed from principal to agent for his buyers. Nor does Defendant challenge on appeal the restitution awarded to Mr. Lal. Because this issue is raised for the first time on appeal and without evidentiary development in any court or a response yet from the Government, the court does not reach whether this contention raises a "substantial question." B. New Non-Appeal Grounds for Release

Defendant's Motion argues that he should be released because of new grounds, not previously presented in this court or in his pending appeal. He says he will present them in a future habeas corpus petition. As a threshold matter, these untested assertions do not meet the requirement of the statute that "the appeal . . . raises a substantial question . . . ." 18

U.S.C. § 3143(b)(1)(B). Even taking a preliminary look at those issues, they appear unlikely to carry the day if presented on habeas; they certainly do not on this Motion. Defendant now contends that one of his bankruptcy attorneys, Lawrence Hirsch, "lied" when he testified that he omitted assets from bankruptcy schedules prepared from Defendant's questionnaires because he did not know of the assets. The accusation of lying is based upon an extraordinary affidavit submitted with the Motion in which Defendant offers extensive contradiction to Mr. Hirsch's trial testimony, contradiction which Defendant chose not to offer at trial, where he would have been subject to cross-examination. Considering the trial evidence and Defendant's uncross-examined affidavit, Defendant has not so far made a credible showing that Mr. Hirsch lied. Defendant's specific contention that Mr. Hirsch "lied" about not knowing of the Car Store interest because six months earlier Defendant gave Mr. Hirsch's office a fee check noting "Car Store" is similarly unpersuasive. A lawyer can hardly be expected to examine such checks, which usually go directly to the bookkeeper, question the client about the notation, and remember it six months later. More importantly, Mr. Hirsch testified that his practice is to have the client fill out bankruptcy schedule questionnaires, from which his staff -5Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 5 of 7

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prepares the schedules for his review. The compelling force of Mr. Hirsch's testimony was that Defendant omitted this asset from the questionnaire submitted to Mr. Hirsch­which Defendant's new motion and affidavit do not deny. A bankruptcy lawyer is plainly entitled to rely on the client's questionnaires. Defendant argues that his trial counsel, Cameron Morgan, was ineffective in various ways. Without prejudging whether Defendant could develop this in a proper adversary proceeding, his quarrel on this motion appears to be mostly over matters of trial judgment and strategy. While the court allowed testimony about the bankruptcy law background upon agreement of the parties, the court did not allow "expert" testimony on the specific duties under bankruptcy law that are the bases of the offenses charged. To the extent Defendant now complains that his trial counsel was ineffective in not eliciting such testimony, he overlooks the fact that the court would not have allowed it. Similarly, Defendant's challenge that his trial counsel was ineffective in not attempting to expose attorney Lawrence Hirsch's "lies" about not knowing of assets when preparing schedules or amended schedules is doubly ill-founded. While Defendant's unorthodox post-trial affidavit of the testimony he was unwilling to give at trial asserts that he provided all that information to his trial counsel, he does not say that he elected to testify and somehow his trial counsel overbore his will, or that he insisted or even asked his trial counsel to attack Mr. Hirsch at trial as a liar. He does not say what discussion he and his trial counsel had or what strategy was agreed upon or acquiesced in. In any event, it is apparent that trial counsel was not ineffective in declining to try to brand Mr. Hirsch as a liar. Mr. Hirsch's testimony was measured, careful, and without apparent basis to challenge truthfulness. A strategy of calling him a liar­with or without Defendant taking the stand to back it up­was highly unlikely to succeed and highly likely to antagonized the jury and demolished Defendant's principal trial strategy, that whatever he did he lacked the required criminal intent. Defendant's other trial strategy, especially apparent in the testimony of Defendant's wife, was an appeal to jury sympathy for being a likeable person having financial difficulties -6Case 2:04-cr-00809-NVW Document 161 Filed 10/11/2006 Page 6 of 7

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and for wanting to avoid eviction with no place to go. Whatever its chances otherwise, that strategy also would have been demolished by an unpersuasive attack on the truthfulness and honesty of a witness like Mr. Hirsch. While some trials have no good strategy, it is never ineffective assistance of counsel to forego a bad strategy that would destroy a better one. Indeed, if trial counsel had introduced the "Hirsch is a liar" theme, it is likely that later counsel would challenge precisely that conduct as ineffective assistance of counsel. IT IS THEREFORE ORDERED that Defendant's Motion for Release Pending Appeal (doc. # 154) is denied. DATED this 10th day of October, 2006.

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