United States v. Sears

          ORDER DENYING MOTION TO WITHDRAW GUILTY PLEA

          William J. Martinez, United States District Judge

         Defendant William J. Sears (“Sears”) pleaded guilty in November 2016 to one count of conspiracy to defraud the United States (18 U.S.C. § 371) and one count of filing a false income tax return (26 U.S.C. § 7206(1)). (ECF Nos. 41, 48, 84.) His sentencing has been postponed pending his opportunity to testify in the Government's case against Guy Jean-Pierre, a co-conspirator who, for procedural reasons not relevant here, was charged in a separate criminal action. (See Criminal No. 17-cr-008-WJM.) Jean-Pierre went to trial before the undersigned in January 2019, and Sears testified at the trial, as expected. The Court then set Sears's sentencing hearing for July 11, 2019.

         On May 4, 2019, Sears filed a Motion to Withdraw Plea of Guilty (ECF No. 139), which is currently before the Court. The Government filed a response opposing the relief sought in the motion (ECF No. 144) and Sears filed a reply (ECF No. 149). Having reviewed these materials, and having reviewed the plea agreement (ECF Nos. 41-42) and the transcript of the change-of-plea hearing (ECF No. 84), the Court finds that Sears has not met the standard for withdrawing a guilty plea. His motion will be denied.

         I. BACKGROUND

         This prosecution came to the Court essentially as a pre-arranged plea deal. On September 15, 2016, Sears and his co-defendant in this case (Scott Dittman) were both charged by information with conspiracy to defraud the United States, and Sears alone was charged with filing a false income tax return. (ECF No. 1.) That same day, both defendants waived the indictment (ECF Nos. 16, 17) and then filed notices of disposition the following day (ECF Nos. 3, 5).

         The essence of the Government's conspiracy charge was that Sears and Dittman had worked together to build a business called FusionPharm, but took numerous steps to, among other things, conceal Sears's relationship to the company (given Sears's prior conviction for federal securities fraud), and create free-trading FusionPharm shares without truthfully satisfying federal regulatory requirements for such shares. This, the Government charged, was a willful evasion of federal securities laws and therefore a conspiracy to defraud the United States.

         Sears's plea agreement details the conspiracy over the course of approximately twenty-five pages. (ECF No. 41 at 12-25 & ECF No. 42 at 1-12.) These facts were mostly stipulated. Some were augmented by footnotes describing additional facts Sears or Dittman, or both, would introduce (if there were a trial, apparently), mostly regarding alleged advice of counsel. (See, e.g., ECF No. 41 at 15 n.5, 17 n.8, 22 n.15, 24 n.18; ECF No. 42 at 6 n.25.) A few facts were disputed, mostly in the sense that Sears or Dittman believed the Government was stating its case too strongly, but none of these facts was dispositive to the Government's case. (See, e.g., ECF No. 41 at 20 n.13, 22 n.16; ECF No. 42 at 7 nn.26-27, 9 n.31.) As for the tax charge against Sears, it is detailed in two pages of unequivocally stipulated facts. (ECF No. 42 at 13-14.)

         Sears's change-of-plea hearing took place on November 14, 2016. (ECF No. 48.) Sears was placed under oath. (ECF No. 84 at 2-3.) The Court then confirmed that Sears understood his oath and that false answers could subject him to a perjury prosecution. (Id. at 4.) After some inquiries of counsel, the Court turned back to Sears and had the following exchange:

Q. . . . Have you read Court Exhibits 1 and 2?^[1]

A. Yes, I have, Your Honor.

Q. Have you read them carefully?

A. Yes, I have, Your Honor.

Q. Have you discussed these documents with your lawyer?

A. In detail, sir, yes.

Q. All right. Has your lawyer answered your questions regarding Exhibits 1 and 2?

A. Yes, he has.

Q. When you signed Exhibits 1 and 2, did you do so voluntarily?

A. Yes, I did, sir.

(ECF No. 84 at 12-13.) The Court then explained that the facts described in the plea agreement are the facts the Government believes it could prove at trial, and continued its exchange with Sears as follows:

Q. . . . So do you agree that the facts that you've reviewed at pages 12 through 37 of the plea agreement are true?

A. Yes, I do, Your Honor.

Q. Is there any inaccuracy in those facts you'd like to correct at this time?

A. No, Your Honor.

(Id. at 13-14.) The Court then asked Sears to “summarize . . . what it is that you did with respect to the counts you are pleading guilty to.” (Id. at 14.) Sears responded by describing one of the events that, according to the Government, amounted to an evasion of federal securities laws:

Your Honor, I was involved in the creation of a convertible promissory note that was backdated. In conjunction with that convertible promissory note, I failed to properly disclose my affiliation status which enabled me to have access to free trading securities. I then liquidated those free trading securities into the public markets for a profit and failed to report that profit on my personal income tax, sir.

(Id.) The Court then turned to the elements of the two crimes to which Sears would plead guilty:

Q. All right. And did you do so in conspiracy with at least one other person to engage in those acts?

A. Indeed, sir.

Q. All right. And you knowingly and voluntarily participated in that conspiracy?

A. Yes, sir.

Q. And you were aware of the objective of that ...