United States District Court, District of Colorado
Gerald R. Rising, Jr., Petitioner (1:13-cv-01056-WYD), Pro se, Florence, CO.
For USA, Plaintiff (1:11-cr-00117-WYD): Tonya Shotwell Andrews, LEAD ATTORNEY, Jaime A. Pena, U.S. Attorney's Office-Denver, Denver, CO.
Wiley Y. Daniel, Senior United States District Judge.
This matter is before the Court on Gerald R. Rising, Jr.'s Motion Under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody filed April 22, 2013. The Government filed a response to the motion on May 1, 2013, and Mr. Rising filed a Traverse in the nature of a reply on July 22, 2013.
Thereafter, Mr. Rising filed a " Pro Se Motion for Partial Summary Judgment" on August 27, 2013, a " Pro Se Motion for an Evidentiary Hearing on Motion to Vacate, Set Aside or Correct Sentence Pursuant to 28 USC § 2255 by a Person in Federal Custody" on September 24, 2013, and a " Pro Se Motion for Summary Judgment" on February 6, 2014. All of these motions relate to the § 2255 motion. The government filed a response to the summary judgment motions on March 3, 2014, and Mr. Rising file a reply on March 11, 2014, at which time Mr. Rising's motions were fully briefed.
I must construe liberally Mr. Rising's filings because he is not represented by an attorney. See Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972); Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). However, I should not be an advocate for a pro se litigant. See Hall, 935 F.2d at 1110. After reviewing the entire file, I find that an evidentiary hearing is not necessary as each of Mr. Rising's claims are resolvable solely on the basis of the existing record. Hooks v. Workman, 606 F.3d 715, 731 (10th Cir. 2010); see also United States v. Fields, 565 F.3d 290, 298 (5th Cir. 2009) (if, based on the record, a court can conclude as a matter of law that the movant cannot establish the elements necessary to state a valid constitutional claim, an evidentiary hearing is not necessary). For the reasons stated below, Mr. Rising's § 2255 motion and other motions referenced above are denied.
II. FACTUAL AND PROCEDURAL BACKGROUND
Defendant was charged on April 4, 2011, with one count of Mail Fraud, one count of Theft or Embezzlement in Connection with a Health Care Program, eighteen counts of Money Laundering, and Aiding and Abetting. (Indictment, ECF No. 1.) On October 26, 2011, Mr. Rising pleaded guilty to one count of Mail Fraud, one count of Theft or Embezzlement in Connection with a Health Care Program, and one count of Money Laundering. (ECF Nos. 40, 41.)
The Rule 11(c)(1)(A) and (B) Plea Agreement and Statement of Facts Relevant to Sentencing (ECF No. 40) [" Plea Agreement" ] sets forth what the Government's evidence would be against Mr Rising. ( Id. at 8.) The Plea Agreement notes that from about 2003 through about November 2010, Mr. Rising " defrauded individuals, companies, and entities throughout the United States and obtained by means of materially false and fraudulent pretenses, representations, and promises, money and property owned by, or under the custody and control of individuals, companies and entities in connection with the delivery of or payment for medical benefits pursuant to health benefit plans." ( Id. at 9.)
Mr. Rising owned and operated Rural Health Plans Initiative Administration Company [" RHPI" ], " a closely held Colorado Corporation that promoted, sold, and administered health benefit plans and employee welfare plans (herein referred to as 'plans') to entities, including school districts in the States of Colorado, Kansas, and Oklahoma, amongst others." (Plea Agreement at 9.) As part of the plans, Mr. Rising and RHPI represented that they " would retain part of the plan contributions, approximately 20%, for administrative costs, and that the remainder was to be held in a designated trust account to pay claims by covered employees of the particular subscribing entities and to purchase excess loss or stop-loss insurance coverage. . . through established insurance providers like Lloyd's of London and AIG to cover any claims that exceeded $25, 000.00." ( Id.) Mr. Rising also owned, operated and controlled RHPI Captive Insurance Company, LTD [" RHPIC" ], which was an off-shore corporation, incorporated in Anguilla, British West Indies. ( Id. at 10-11.) RHPIC maintained the plan contributions in the trust account after the administrative fees were deducted. ( Id. at 10.) Mr. Rising " created RHPIC to avoid regulation by the Colorado Board of Insurance." ( Id. at 11.)
Mr. Rising promoted the health care benefit plans to his customers by falsely representing to them that the funds paid into their plans would be properly maintained and accounted for in the trust and used to pay the claims of each plan's beneficiaries. (Plea Agreement at 10-11.) They were not. Mr. Rising paid claims using funds deposited by other beneficiaries in other plans, in violation of the trust agreement. ( Id. at 11.) He also falsely represented that reputable insurance companies like Lloyd's of London and AIG would provide stop loss coverage at $25, 000.00 when, in fact, those policies did not provide coverage on claims until they reached approximately $125, 000.00. ( Id. at 11.)
In 2008 and 2009, Mr. Rising " increased his salary in order to siphon monies held by RHPIC for the benefit of plan beneficiaries." (Plea Agreement at 11.) In 2009 and 2010, he " began to kite checks between various bank accounts he controlled for himself, RHPI and RHPIC, in order to create a false impression as to the financial status" of those companies. ( Id.) In addition, between July 2010 and November 2010, Mr. Rising " directed employees to falsely represent to various plan beneficiaries and employers that the claims for health care services were in fact paid when they were not, in hopes of allaying their concerns regarding their respective plans." ( Id.) During that same time period, Mr. Rising also " directed employees to send balance statements to plan employers that falsely represented" their account balances " because such statements were influenced by the issuance of checks that were held at GERALD RISING'S direction, and never sent." ( Id. at 11-12.)
In late 2010, Mr. Rising began to send bills to plan participants for purported healthcare-related payments RHPIC had made on their customer's behalf. (Plea Agreement at 12.) However, RHPIC had not made these payments. ( Id.) Mr. Rising " caused checks and premiums to be mailed by plan employers . . in order to fund the plans." ( Id.)
As noted previously, Mr. Rising pleaded guilty on October 26, 2011, to one count of Mail Fraud, one count of Theft or Embezzlement in Connection with a Health Care Program, and one count of Money Laundering. As part of his plea, he stipulated that the aggregate loss to the victims of his scheme to defraud was over $2.5 million, but less than $7 million. (Plea Agreement at 12.) Mr. Rising also agreed to waive his right to appeal and to collaterally attack the prosecution, conviction, or sentence in a 28 U.S.C. § 2255 motion. ( Id. at 5.) However, this waiver did not prevent Mr. Rising from seeking relief if there was a retroactive change in the guidelines, he was denied effective assistance of counsel, or he had a claim of prosecutorial misconduct. ( Id.)
During the plea hearing, Mr. Rising explained his criminal conduct to the Court. Specifically, he stated that in 2003 his business suffered " " unplanned for catastrophic losses that resulted in" his " business having a financial hole that I had to carry forward." (Plea Hr'g Tr. at 25:22 (Oct. 26, 2011), attached to the Government's response as Attachment A [" Plea Hr'g Tr." ]). Mr. Rising stated he was able to maintain his business by using premium contributions from employer's plans to fund claims from the prior months " [a]nd that was wrong" . ( Id. at 25:23-26:1.) He said he " should have shut the business down immediately and taken my lumps at that point." ( Id. at 26:2-3.) He was able to maintain his business over the years " at a fairly stable level" by " allowing people to believe that the reinsurance mechanism that [he] provided them was insurance and not partially a loan mechanism, and that constituted fraud." ( Id. 26:4-8.)
Mr. Rising admitted that he told his employees to misrepresent to employers and employees that claims had been paid or were going to be paid when they were not. (Plea Hr'g Tr. at 27:5-8.) Mr. Rising further admitted that he provided false reports to his customers that did not accurately reflect the financial status of their plans. Those reports led Mr. Rising's customers to believe " that groups of claims had been paid, and they had not." ( Id. at 27:5-14.) Mr. Rising also admitted increasing his salary and kiting checks between his personal and business accounts, to create the appearance that RHPI was lucrative in order to sell it. ( Id. 26:10-12, 18-23.) Eventually, Mr. Rising stated he could no longer carry the scheme and it " just fell apart" . ( Id. at 26:10-16.)
The Plea Agreement states that " [t]he parties agree that there is no dispute as to the material elements that establish a factual basis for the offense for conviction." (Plea Agreement at 8.) Further, Mr. Rising was asked during the plea hearing whether he had read the " Stipulation of Factual Basis and Facts Relevant to Sentencing" in the Plea Agreement at pages eight through twelve, and he said he had. (Plea Hr'g Tr. at 3:8.) He was then asked, " Do you agree with what it says?", to which he responded " Yes", and affirmatively stated that he did not disagree with any parts of it. ( Id. at 25:9-12.) Finally, he was asked, " Did you engage in the conduct here attributable to you?" ( Id. at 25:13-14.) He responded, " Yes, I did." ( Id. 25:15.)
Pursuant to Rule 11 of the Federal Rule of Criminal Procedure, the Court advised Mr. Rising of his right to plead not guilty and proceed to trial. (Plea Hr'g Tr. at 36:14-19; 38:21-39:2.) The Court told Mr. Rising that he would have the right to an attorney at all stages, and that if he could not afford one that one would be appointed by the Court. Mr. Rising acknowledged that he understood his rights. ( Id. at 36:20-37:1; see also ECF Nos. 40, 41.) Mr. Rising also agreed that no one had coerced, induced, persuaded, or forced him to plead guilty and he had no mental reservations or doubts about entering his plea of guilty. ( Id. at 39:22-25: 40:7-9.) Further, the Court advised him that the decision to plead guilty was voluntary, and asked him, " Do you want to go through with this today? ( Id. at 6:2-3.) Mr. Rising responded " Absolutely." He stated that he was " pleading guilty because I'm guilty of the offenses." ( Id. 40:1-6.) Mr. Rising also responded in the affirmative when asked whether his " decision to plead guilty" was " made after full and careful thought, upon the advice of your attorney, with a full understanding of your rights, the facts and circumstances of the case, and the potential consequences of your guilty plea." ( Id. 41:3-8.)
The Court further verified that Mr. Rising had sufficiently discussed " all aspects" of the case with his attorney Gregory Goldberg. Mr. Rising stated that he had. Mr. Rising said that his attorney's representation had been both effective and competent and he was satisfied with the representation he received. (Plea Hr'g Tr. at 40:10-18; see also ECF Nos. 40, 41.)
Mr. Rising was sentenced on March 30, 2012. At that time, the parties had stipulated to a loss figure of $3.5 million. (Sentencing Hr'g Tr. 14:5-15 (Mar. 30, 2012), attached to the Government's Answer as Attachment B [" Sentencing Hr'g Tr." ]). Based on the presentence report, the probation department requested that the court sentence Mr. Rising to 72 months of incarceration. ( Id. at 11:17-12:1.) However, the government requested a variant sentence of 60 months. This sentence was recommended because Mr. Rising had provided " extraordinary" cooperation. ( Id. at 15:10-25; 16:1-5; 17:4-23; see also Government's Motion Regarding Acceptance of Responsibility, ECF No. 60.)
Explaining Mr. Rising's cooperation, the government stated that Mr. Rising retained his attorney when he realized that the IRS and the Department of Labor were investigating him, and approached the government to cooperate early on. (Sentencing Hr'g Tr. at 16:1-5.) Mr. Rising's cooperation included attempting to determine the restitution amount by going through RHPI's business records. ( Id. at 8:24-9:2.) However, even with " extraordinary efforts", Mr. Rising was unable to figure out the amount of the loss because the business records were in disarray, were massive (70 boxes of financial records, plus computer records), and were " impossible to decipher" because Mr. Rising commingled funds in various accounts. ( Id. at 9:2-14, 13:8-14, 14:6-20; 16:13-20, 18:18-22.) The actual loss was estimated to be between two to seven million, with the probation office indicating that it was most likely the high end of that range--" 7 million, maybe even more." ( Id. 9:6-7; 14:10-19.) The government further informed the Court that Mr. Rising had, as part of his plea agreement, met with the victims. ( Id. at 17:4-21.)
After hearing the sentencing recommendations and statements from the probation department, the prosecutor, Mr. Rising, and Mr. Rising's attorney, Mr. Rising was sentenced to 66 months. ( Id. at 49:6-11.) One year later, Mr. Rising filed his 28 U.S.C. § 2255 motion challenging his conviction and sentence. I discuss the facts Mr. Rising relies on in support of his motion in the context of his claims. I note that his " Pro Se Memorandum of Arguments & Authorities in Support of Motion to Vacate, Set Aside or Correct Sentence Pursuant to 28 U.S.C. § 2255 by a Person in Federal Custody" [" Memorandum" ] contains a Verification under penalty of perjury that the statements are within Mr. Rising's " personal knowledge, and are true and correct, based upon my knowledge, information and belief." (Memorandum at 24.)
This is Mr. Rising's first § 2255 motion. He has met the procedural requirements of § 2255 for this Court to rule on the issues he raises in his motion. First, Mr. Rising has not pursued any other federal remedies, including any prior post-conviction motions. See Rule 5(b) of the Rules Governing Section 2255 Cases. Second, his motion was submitted within the one-year statute of limitations set forth under 28 U.S.C. § 2255(f)(1).
A. The § 2255 Motion
1. Ineffective Assistance of Counsel Claims
a. Claim One
Mr. Rising argues in Claim One that his counsel Mr. Goldberg rendered ineffective assistance of counsel by failing to note and argue meritorious defenses to his guilt, meritorious defenses that would have allegedly been outcome determinative. He also asserts that his counsel never intended to assert or advocate his right to trial, but determined that the case would be disposed by plea of guilty in accordance with an alleged " business model" of counsel's firm. In that regard, he asserts that in a meeting with counsel, he expressed his desire for a jury trial and was advised by one of defense counsel's associates that this would not fit the business model. ( Id. at 13.) Mr. Rising argues that his right to a jury trial was emasculated by the fact his counsel never intended to proceed to trial, and that but for counsel's ineffectiveness, he would never have pleaded guilty. ( See Traverse to the United States' Answer, ECF No. 97-1 [Traverse" ], at 10.)
It is further argued by Mr. Rising that his counsel did not conduct a single interview or conduct any investigation in preparation for trial, and did not prepare any pretrial motions or other trial documents, despite the fact that trial had been set. This means, according to Mr. Rising, that his counsel knew that the case would not proceed to trial. Mr. Rising also asserts that his counsel lied about and/or refused to allow him to see the grand jury transcripts which were disclosed by the Court. ( See Order of April 19, 2011, ECF No. 13.) He further suggests collusion between AUSA Jaime Pena and his counsel in regard to the transcripts and the guilty plea.
Finally, Mr. Rising argues that the court already found his allegations, which have not been refuted by the government or defense counsel, to be sufficient to warrant the granting of habeas relief. (Traverse at 10.) He asserts that if his sworn statement and exhibits were insufficient to establish ineffective assistance, the court would have dismissed the § 2255 motion sua sponte under the Prison Litigation Reform Act. Instead, it ordered the government to file an answer.
I first reject Mr. Rising's argument that the Court's failure to dismiss the § 2255 motion on preliminary review and its Order of April 25, 2013, requiring the government to file an answer, mean that the Court has already found Mr. Rising's allegations sufficient to warrant habeas relief. A § 2255 motion can only be dismissed without notice to the United States and a hearing if " the motion and the files and records of the case conclusively show that the prisoner is entitled to no relief." 28 U.S.C. § 2255(b) (emphasis added). As explained by the Ninth Circuit, " a habeas court reviewing a petition under Rule 4 reviews only to see if it plainly appears that petitioner is not entitled to relief." Calderon v. U.S. Dist. Court for the N. Dist. of Cal., 98 F.3d 1102, 1109 (9th Cir. 1996) (emphasis in original). Thus, " Rule 4 is intended to screen out plainly frivolous appeals." Id. Summary dismissal under Rule 4 is appropriate only when the allegations are " 'palpably incredible'" or " 'patently frivolous or false'", or when the allegations are not " so 'vague or conclusory' . . . as to warrant dismissal for that reason alone." Blackledge v. Allison, 431 U.S. 63, 75-76, 97 S.Ct. 1621, 52 L.Ed.2d 136 (1977) (quotations omitted).
Thus, the fact that Mr. Rising's motion was not summarily dismissed under Rule 4 means simply that his claims were found not to be patently frivolous or incredible. This has no bearing, however, on whether his claims actually have merit or whether the facts he alleges are actually sufficient to support habeas relief. Moreover, while Mr. Rising points repeatedly to the government's failure to provide affidavits or evidence to counter the facts he has presented, the government is not required to support its response with such documents. See Flores v. United States, No. 94-3457, 1996 WL 12583, at *4 n. 5 (7th Cir. 1996) (" The § 2255 rules state merely that the government's answer 'shall respond to the allegations of the motion, ' Rule 5, . . .; the rules nowhere contemplate that the government support its response to the allegations with counter-affidavits or any other specific documents"). In this case, the government relies on the record of this case, including the plea agreement, plea hearing, and sentencing hearing, to support its arguments. Thus, I turn to the merits of Mr. Rising's ineffective assistance of counsel argument, which must be addressed under the test set forth in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). See Burnett v. United States, No. 09-30032-GPM, 2013 WL 6083422, at *3 (S.D. Ill. Nov. 19, 2013) (" If a § 2255 motion claiming ineffective assistance of counsel survives preliminary review and is considered on the merits, the court evaluates the claim" under Strickland .).
The " Sixth Amendment guarantees a defendant the right to have counsel present at all critical stages of the criminal proceedings, " which includes the entry of a plea of guilty. Montejo v. Louisiana, 556 U.S. 778, 786, 129 S.Ct. 2079, 173 L.Ed.2d 955 (2009) (citation and quotation omitted); see also Argersinger v. Hamlin, 407 U.S. 25, 34, 92 S.Ct. 2006, 32 L.Ed.2d 530 (1972) (when a defendant pleads guilty, " [c]ounsel is needed so that the accused may know precisely what he is doing, so that he is fully aware of the prospect of going to jail or prison, and so that he is treated fairly by the prosecution."). A claim of ineffective assistance of counsel in negotiating and advising a defendant to plead guilty is properly raised in a collateral proceeding. See United States v. Ibarra-Coronel, 517 F.3d 1218, 1222 (10th Cir. 2008) (citing United States v. Galloway, 56 F.3d 1239, 1242 (10th Cir. 1995)); United States v. Gutierrez-Vasquez, 373 F.App'x 860, 862-63 (10th Cir. 2010).
The Supreme Court has established a two-prong test to review ineffective assistance of counsel claims. The movant must demonstrate both that counsel's performance fell below an objective standard of reasonableness and that counsel's deficient performance was prejudicial. Strickland, 466 U.S. at 687. Courts are free to address these prongs in any order. Byrd v. Workman, 645 F.3d 1159, 1168 (10th Cir. 2011). This standard applies to claims of ineffective assistance of counsel in the plea bargain context. ...