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UNITED STATES v. MOHAMMAD

April 7, 1998

UNITED STATES OF AMERICA,
v.
MOHAMMAD S. MOHAMMAD,



The opinion of the court was delivered by: GETTLEMAN

 On January 13, 1993, a grand jury returned a superseding indictment charging defendant Mohammad S. Mohammad ("Mohammad") and others with conspiracy and multiple counts of bankruptcy fraud, mail fraud, wire fraud, and structuring cash transactions to avoid IRS reporting requirements. After a jury trial, Mohammad was convicted on all counts in which he was named. On October 25, 1993, the district court sentenced him to 92 months in prison, fined him $ 9,600, and ordered $ 3.2 million in restitution. The Court of Appeals affirmed Mohammad's conviction and sentence. See United States v. Mohammad, 53 F.3d 1426 (7th Cir. 1995). Mohammad now challenges his conviction and sentence pursuant to 28 U.S.C. § 2255.

 BACKGROUND

 The charges against Mohammad arose out of a "bust-out" scheme executed by Mohammad and his co-defendant (collectively "defendants"). Defendants started by creating Discount Merchandise, Inc. ("Discount") as an operating business. They then ordered goods on behalf of Discount, sold the goods at prevailing wholesale market prices, and paid the suppliers. In this way, defendants established credit references for Discount. Over time, defendants began ordering larger and larger quantities of goods on credit. Eventually, defendants fraudulently obtained over $ 3.2 million in goods on credit. Most of these goods were stored in a warehouse. They then "busted-out" by selling the goods (often at prices below cost), not paying the suppliers, and diverting the proceeds, totaling over $ 1.7 million, to their personal bank accounts. Eventually, defendants declared Discount insolvent. Defendants concealed the diversion of the fraudulently obtained proceeds by: (1) structuring bank deposits in an attempt to avoid the reporting requirements of the Currency Transaction Reporting Act; (2) smuggling approximately $ 1.2 million in proceeds out of the country; and (3) destroying business records.

 DISCUSSION

 "Habeas corpus relief under 28 U.S.C. § 2255 is limited to an error of law that is jurisdictional, constitutional, or constitutes a fundamental defect which inherently results in a complete miscarriage of justice." Bischel v. United States, 32 F.3d 259, 263 (7th Cir. 1994) (internal citations and quotations omitted). The record is reviewed and all reasonable inferences are drawn in favor of the government. Id.; Messinger v. United States, 872 F.2d 217, 219 (7th Cir. 1989). Mohammad claims he was denied his sixth amendment right to effective assistance of counsel. Mohammad did not raise this issue on appeal. Ordinarily, the failure to raise an issue on direct appeal bars a defendant from raising it in a § 2255 proceeding. Borre v. United States, 940 F.2d 215, 217 (7th Cir. 1991). Nevertheless, because some of the grounds for Mohammad's ineffective assistance of counsel claims are based on evidence outside of the trial record, all the grounds for his claim are properly asserted now. Duarte v. United States, 81 F.3d 75, 77-78 (7th Cir. 1996); Guinan v. United States, 6 F.3d 468, 471-73 (7th Cir. 1993).

 To prevail on his claim of ineffective assistance of counsel, Mohammad must show that his counsel's conduct "fell below an objective standard of reasonableness" and "outside the wide range of professionally competent assistance." Strickland v. Washington, 466 U.S. 668, 690, 80 L. Ed. 2d 674, 104 S. Ct. 2052 (1984). Counsel is "strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment." Id. Mohammad must also show prejudice by demonstrating that it is reasonably likely that, but for his counsel's errors, the decision reached would have been different. Id. at 696. The counsel's errors must be so serious as to deprive the petitioner of a fair trial, that is, a trial whose result is reliable. Lockhart v. Fretwell, 506 U.S. 364, 369-70, 122 L. Ed. 2d 180, 113 S. Ct. 838 (1993). In other words, Mohammad "must establish that 'there is a reasonable probability that, but for counsel's unprofessional errors . . . the factfinder would have had a reasonable doubt respecting guilt.'" United States v. Adamo, 882 F.2d 1218, 1226 (7th Cir. 1989) (quoting Strickland, 466 U.S. at 695-96).

 Attorney Julius Lucius Echeles ("Echeles") represented Mohammad at his preliminary hearing and at trial. *fn1" Mohammad argues that Echeles was ineffective in several ways. First, Mohammad argues that Echeles was ineffective because he failed to explore the possibility of a plea agreement, even though Mohammad asked about entering a plea on several occasions. Mohammad alleges that Echeles summarily dismissed his suggestions of a plea agreement and said that "the best he could do was ten to twelve years" either way. Mohammad asserts that Echeles failed to explain how the Federal Sentencing Guidelines worked or describe the advantages that might be available to him if he entered a plea.

 In Dillon v. Duckworth, 751 F.2d 895, 901 (7th Cir. 1985), the Seventh Circuit found that the "failure to initiate plea-bargaining negotiations is not always error, but in a case in which the State would prefer the defendant's testimony at an accomplice's trial, [a] defense counsel's failure to explore the possibility is inexplicable." In this case, there is no evidence that the government wanted to obtain Mohammad's cooperation against any other individuals. On the contrary, the government asserts that it was not interested in a guilty plea by Mohammad because he was the most culpable defendant and, hence, its primary target. Yet, the court in Dillon also found that whether the government would have encouraged or accepted a guilty plea, if offered, was irrelevant. Id. What was considered relevant in Dillon was "the strong suggestion of unfamiliarity with the case and lack of preparation that the failure to try and plea bargain showed." Id. Like the court in Dillon, this court finds that Echeles' alleged failure to even ask the government about the possibility of a plea agreement is inexplicable, especially if, as claimed, his client repeatedly inquired on the subject. Even more troubling is Echeles' alleged statement to Mohammad that the best he was going to do was "ten to twelve years" either way; this is simply not a fair or accurate description of Mohammad's situation. Pleading guilty typically results in at least a two-level adjustment, in the defendant's favor, for acceptance of responsibility. See U.S.S.G. § 3E1.1. The reduction in the defendant's offense level translates into less jail time. Adjustments relating to a defendant's role in the offense -- such as the four-level increase that Mohammad received under U.S.S.G. § 3B1.1(a) for being an organizer or leader of extensive criminal activity -- are also often the subject of negotiation.

 The Seventh Circuit has found that "in the ordinary case criminal defense attorneys have a duty to inform their clients of plea agreements proffered by the prosecution, and that [the] failure to do so constitutes ineffective assistance of counsel under the sixth and fourteenth amendments." Johnson v. Duckworth, 793 F.2d 898, 902 (7th Cir. 1986). The court also found that defendants "must be involved in the decision-making process regarding [an] agreement's ultimate acceptance or rejection." Id. It follows from this rationale that a defendant who expresses an interest in pleading guilty has a similar right to be adequately informed of the risks and advantages of doing so, including an explanation of how the Sentencing Guidelines affect his case. Therefore, the court will appoint Mohammad an attorney to further investigate this claim of ineffective assistance of counsel. The court will determine whether an evidentiary hearing is necessary after it receives additional submissions from Mohammad's appointed attorney and the government.

 Mohammad also argues that Echeles should have called an FBI agent, who he does not identify, as a witness and asked him about the Discount rent checks bearing Mohammad's signature. In addition, Mohammad argues that Echeles should have retained a handwriting expert to challenge the authenticity of his signature on those checks. Mohammad claims that the testimony of these witnesses would have shown that he never signed any checks on behalf of Discount.

 Mohammad also argues that Echeles should have offered photographs and blueprints into evidence to discredit testimony that the warehouse was "as big as a football field." Finally, Mohammad argues that Echeles should have presented the testimony of certain grocery store owners to rebut evidence that Mohammad sold goods to them and collected money from them.

 Mohammad's second argument is without merit. Contrary to Mohammad's assertion, the lease itself was admitted into evidence. McGee did not testify that Mohammad's name was on the lease. Rather, McGee testified that although Mohammad made the decision to rent the property, Saleh was named as the lessor on the lease. The lease indicates that Discount was the tenant and appears to bear Saleh's signature. On cross-examination, Echeles challenged McGee's testimony that Mohammad was present when the lease was first negotiated. McGee also testified that her mother and father helped her manage the warehouse, dealt with the lessees, and often collected the rent for her. The testimony of McGee's father would not, ...


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