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United States v. Bloom

United States District Court, N.D. Illinois, Eastern Division

June 25, 2019

United States of America, Plaintiff,
v.
Eric Bloom, Defendant.

          MEMORANDUM OPINION AND ORDER

          Ronald A. Guzmán, United States District Judge.

         Eric Bloom's motion to vacate, set aside, or correct his sentence pursuant to 28 U.S.C. § 2255 and request for an evidentiary hearing [1] are denied for the reasons stated below. The Court denies a certificate of appealability. Civil case terminated.

         STATEMENT

         Bloom was tried on a 20-count indictment before a jury between February 24, 2014 and March 25, 2014. The government dismissed one count during the trial, and the jury found Bloom guilty on the remaining 19 counts of wire fraud and investment-adviser fraud. The Seventh Circuit upheld Bloom's conviction and sentence on appeal, United States v. Bloom, 846 F.3d 243 (7th Cir. 2017). The Seventh Circuit's opinion and Bloom's statement of facts on appeal (Def.'s § 2255 Mot., Ex. A, Dkt. # 1-1) provide a full recounting of the relevant facts in this case. The Court will discuss specific facts only as necessary in the text of the order.

         Analysis

         Section 2255 provides that a criminal defendant is entitled to relief from his conviction and sentence if “the court finds that the judgment was rendered without jurisdiction, or that the sentence imposed was not authorized by law or otherwise open to collateral attack, or that there has been such a denial or infringement of the constitutional rights of the prisoner as to render the judgment vulnerable to collateral attack.” 28 U.S.C. § 2255(b). A court may deny a § 2255 motion without an evidentiary hearing if “the motion and the files and records of the case conclusively show” that the defendant is not entitled to relief. Id. Relief under § 2255 is available “only in extraordinary situations, such as an error of constitutional or jurisdictional magnitude or where a fundamental defect has occurred which results in a complete miscarriage of justice.” Blake v. United States, 723 F.3d 870, 878-79 (7th Cir. 2013).

         A. Brady Violation Claim

         “[T]he suppression by the prosecution of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution.” Brady v. Maryland, 373 U.S. 83, 87 (1963). “The [Supreme] Court has enumerated three components of a Brady violation: ‘The evidence at issue must be favorable to the accused, either because it is exculpatory, or because it is impeaching; that evidence must have been suppressed by the [government], either willfully or inadvertently; and prejudice must have ensued.'” Lieberman v. Scott, No. 18 C 5713, 2019 WL 2450485, at *10 (N.D. Ill. June 12, 2019) (citation omitted).

         Bloom argues that the government violated its obligation under Brady by failing to disclose until sentencing the position of the Commodities Futures Trading Commission (“CFTC”) that its Rule 1.25 “did not, at the relevant time, prohibit the use of leverage.” (Def.'s § 2255 Mot., Dkt. # 1, at 6.) Bloom, however, has procedurally defaulted this argument by failing to raise it on appeal. Procedural default means that “[a] claim cannot be raised for the first time in a § 2255 motion if it could have been raised at trial or on direct appeal.” McCoy v. United States, 815 F.3d 292, 295 (7th Cir. 2016). “A federal prisoner cannot bring defaulted claims on collateral attack unless he shows both cause and prejudice for the default.” Id. “Absent a showing of both cause and prejudice, procedural default will only be excused if the prisoner can demonstrate that he is ‘actually innocent' of the crimes of which he was convicted.” Id.

         During trial, the government presented the testimony of several witnesses who either directly testified or insinuated that leverage was not permitted in an account governed by CFTC Rule 1.25. Bloom acknowledges that at the sentencing stage of the proceedings, the government offered an affidavit from Robert Wasserman, Chief Counsel for the Division of Clearing and Risk for the CFTC, stating that Sentinel's conduct had inflicted harm on the futures market. Bloom called Wasserman to testify at his sentencing, eliciting testimony from him that Rule 1.25 “neither prohibits nor permits leverage.” (Def.'s § 2255 Mot., Ex. C, Dkt. # 1-3, at 12.) From this, Bloom argues that “[b]ecause of the import of Rule 1.25 in the context of Sentinel's operations and [the] trial, the [government's] failure to provide favorable evidence in the CFTC's possession to the defense . . . represents a Brady violation and warrants a new trial.” (Def.'s § 2255 Mot., Dkt. # 1, at 6.) Based on Bloom's own recitation of the facts, he was aware of the CFTC's position on the issue but failed to raise any Brady argument on appeal.

         Bloom's attempt to avoid the consequences of his failure is unavailing. Specifically, he argues that the “issue could not have been raised on direct appeal because the evidence pointing to the CFTC as a member of the prosecution team [, thus implicating Brady, ] was not in the record” at the time of the appeal. (Def.'s Reply, Dkt. # 20, at 4) (emphasis in original). Bloom seeks discovery on the issue of whether the CFTC is or should have been considered part of the prosecution team.[1] As an initial matter, the CFTC does not have to have been a member of the prosecution team in order for there to have been a Brady violation. The prosecution offered the testimony of Wasserman; thus, if his testimony at issue had been exculpatory, the government would be responsible for any Brady violation, regardless of the CFTC's status. The source of the purportedly exculpatory evidence is immaterial if the prosecution knew about it and withheld it.

         In any event, defense counsel cross-examined Wasserman at sentencing on the exact issue he now raises. If Bloom believed a Brady violation had occurred, he had plenty of notice to either raise it at sentencing or include it as an issue on appeal. Bloom fails to demonstrate cause and prejudice for having failed to do so, or that he is actually innocent; thus, the issue is procedurally defaulted.[2]

         B. Sixth Amendment Violation Claim

         Bloom next contends that Sentinel's bankruptcy Trustee's “selective” assertion of the attorney-client privilege with respect to the testimony of Peter Savarese, a lawyer Sentinel had engaged to provide compliance and disclosure advice, violated Bloom's Sixth Amendment right to call witnesses and present a defense. According to Bloom, Savarese could have testified, among other things, “that he had reviewed Sentinel's disclosures and had ...


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