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Ciota v. United States

November 10, 2010

FRANK KELLY CIOTA, PETITIONER,
v.
UNITED STATES OF AMERICA, RESPONDENT.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

OPINION

On February 22, 2010, Petitioner, Frank Kelly Ciota, filed a pro se Motion to Vacate, Set Aside, or Correct Sentence Under 28 U.S.C. § 2255 (#1). On March 22, 2010, Petitioner filed an Amended Motion (#3) with attached exhibits. On April 15, 2010, the Government filed its Response to Petitioner's Motion (#5). On May 3, 2010, Petitioner filed a Reply (#6). On October 4, 2010, Petitioner filed a Supplemental Brief (#9) and, on October 25, 2010, Petitioner filed a Supplemental Motion (#10) seeking to raise an additional claim.

This court has carefully and thoroughly reviewed the arguments of the parties and the documents provided. This court has also reviewed the complete transcripts of Petitioner's guilty plea hearing and the sentencing hearings held before this court. Following this careful consideration, this court rules as follows: (1) Petitioner's original Motion (#1) was superseded by Petitioner's Amended Motion (#3) and is MOOT; (2) Petitioner's Amended Motion (#3) is DENIED; (3) because the additional claim Petitioner has raised was not raised on a timely basis, Petitioner's Supplemental Motion (#10) is DENIED; and (4) because Petitioner has not made a substantial showing of the denial of a constitutional right, a certificate of appealability is DENIED.

FACTS

In Case No. 05-CR-20029, Petitioner was charged, along with his co-defendants Gary Knox and Dennis Wiese, in a 42-page superseding indictment which alleged various counts of bank fraud, mail fraud, wire fraud and conspiracy to commit money laundering. Specifically, Petitioner was charged with one count of bank fraud, one count of wire fraud, five counts of mail fraud and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). The superseding indictment set out in a detailed and specific manner the actions of Petitioner, Knox and Wiese in devising and executing a broad and long-lasting scheme to defraud various real estate lenders, including Central Illinois Bank, Champaign, Illinois, a federally-insured bank, real estate sellers, real estate buyers, and others.

The superseding indictment alleged that Petitioner and his co-defendants "reaped the benefits of the scheme by causing the payment of appraisal fees to Defendant WIESE and by Defendants KNOX and CIOTA converting the profits from the fraudulent transactions to their personal use and using such profits to promote the ongoing fraudulent scheme (emphasis added)." The superseding indictment included numerous allegations that Petitioner and Knox used the "profit" from their scheme to convert to their personal use and to promote the scheme. The superseding indictment alleged that Petitioner and Knox conspired to launder the proceeds of the criminal scheme. The superseding indictment alleged that, as part of this conspiracy, Petitioner and Knox engaged in numerous financial transactions which involved as much as $1,000,000 in bank cashier's checks and personal bank checks. The superseding indictment alleged that these transactions involved the proceeds of their fraudulent scheme, with the intent to promote the carrying on of such scheme and with the intent to conceal and disguise the nature, location, source, ownership, and control of the proceeds of their scheme.

On April 17, 2006, Petitioner, who was represented by retained counsel, Jeffrey T. Page, pleaded guilty to all eight counts of the superseding indictment for which he was charged. At the guilty plea hearing, Petitioner was sworn to tell the truth and stated that he was "[a]ccepting [his] responsibility for the wrongdoings that have taken place during this whole real estate transaction process." Petitioner also stated that he was satisfied with his attorney's representation. After thoroughly discussing the rights Petitioner was giving up by pleading guilty, the Government set out the elements of the charged offenses and then set out in detail the factual basis for the plea. The Government stated:

The object of the defendants' scheme to defraud was to engage in the practice of fraudulent real estate "flipping" whereby the defendants made false representations, including false real estate appraisals, fraudulent real estate appraisals prepared by Defendant Wiese and used by Defendants Knox and Mr. Ciota, that caused real estate owners to sell, real estate buyers to purchase, and lending institutions to finance rental real estate properties that were sold at prices which the defendants, including Mr. Ciota, caused to be fraudulently inflated to substantially higher than their reasonable value.

The Government specifically referenced occasions where Petitioner and Knox used the profit from their scheme to convert to their personal use and to promote the scheme. The Government referred to several specific sales and stated, for example:

That particular transaction involved the sale of property at 1145 North Pine Street in Decatur to a seller for $43,000, which was more than three times the amount of the legitimate sales price that the seller had bought the property only a few years before. $25,000 in profit from that fraudulent sale was then converted by Defendants Knox and Ciota to their personal use and to promote the scheme.

The Government discussed another transaction "in which an additional piece of property owned by Mr. Knox's business which he had purchased for $13,500 was sold to Mr. Ciota's relatives for an inflated price of $75,000, $50,000 of which - - $50,000 - - resulting in $50,000 in profit which Mr. Knox and Mr. Ciota converted to their personal use and to promote their scheme."

After the Government completed its detailed discussion of the factual basis for the guilty plea, this court then addressed Petitioner directly and stated:

You're not contesting the factual basis as to the elements of the offense. You're pleading guilty to the elements of the offense because you are, in fact, guilty of violating those eight counts as set forth in the statute; is that correct?

Petitioner, who had sworn to tell the truth, answered "[y]es, sir." This court then accepted the guilty plea as "freely, voluntarily, knowingly, intelligently made."

The sentencing hearing was continued numerous times and finally commenced on December 18, 2007. At the hearing, the Government presented the testimony of Daniel Bergan, who presented lengthy testimony regarding the nature of the scheme and the amount of the loss incurred because of the real estate transactions. Bergan also testified that Petitioner engaged in fraud in helping his daughter obtain student loans and used some of the proceeds from the loans to pay his attorney. Petitioner's counsel presented the testimony of Dr. Jay Riseman. Dr. Riseman testified extensively regarding Petitioner's serious medical conditions, including diabetes, hypertension, osteoarthritis and psoriasis. Dr. Riseman also testified regarding Petitioner's twin sons, who were 12 years old on the date of the hearing. Dr. Riseman testified that the twins were born prematurely and suffered from numerous disabilities, including cerebral palsy. Dr. Riseman testified that the boys required a great deal of assistance and care in their daily lives and that it would be difficult for one parent to take care of both boys on a day-to-day ...


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