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United States v. Brunt

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

October 31, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT BRUNT, Defendant.

          MEMORANDUM OPINION AND ORDER

          Ronald A. Guzman United States District Judge.

         Before the Court are Robert Brunt's pro se petition to vacate, set aside, or correct his sentence pursuant to 28 U.S.C. § 2255, motion for leave to file a third amended § 2255 petition, and motion for resentencing. For the reasons set forth below, the motion for leave to file a third amended § 2255 petition is granted in part and denied in part; the § 2255 petition, as amended, is denied; and the motion for resentencing is denied.

         BACKGROUND

         Robert Brunt was charged with several counts of mail and wire fraud as well as one count of money laundering, in connection with "an elaborate real estate financing fraud scheme in Chicago during the housing bubble of the early 2000s." United States v. Farano, 749 F.3d 658, 660 (7th Cir. 2014). The scheme involved discounted purchases of properties from the Department of Housing and Urban Development (HUD) (under false pretenses), alleged rehabilitation of those properties, and sales of the properties at fraudulently inflated prices to fraudulently qualified mortgage-loan recipients. Id. Brunt's role was to recruit investors (the buyers of the properties) and appraisers, deal with a HUD-certified nonprofit entity that the participants in the scheme corrupted to buy properties for them, and manage the cosmetic renovations. Id. at 663-64. A jury convicted Brunt and his codefendants, and the Court sentenced Brunt to a term of 151 months' imprisonment. Brunt was also ordered to pay $1, 618, 100.00 in restitution.

         Brunt appealed, raising the following arguments: (1) the Court denied him his Sixth Amendment right to confront an adverse witness when it limited his cross-examination of codefendant Walter Jackson; (2) the Court clearly erred when it allowed the government to cross-examine Brunt with statements from his proffer to the government without a proper showing that Brunt's testimony was inconsistent with his proffer statements; (3) the cumulative effect of those errors denied Brunt his right to a fair trial; and (4) the Court plainly erred in its loss calculation for purposes of determining the applicable guideline sentencing range and restitution amount. The Court of Appeals affirmed Brunt's convictions and sentence, but remanded the case for recalculation of the restitution amount. On November 30, 2016, the Court entered an amended judgment order modifying the restitution amount to $ 1, 077, 540.00 but otherwise leaving the original sentence intact. Brunt did not appeal from the amended judgment.

         In the instant petition for postconviction relief, Brunt raises several claims of ineffective assistance of counsel. He also seeks leave to file a third amended § 2255 petition.

         DISCUSSION

         A. Motion for Leave to File a Third Amended Section 2255 Petition

         Brunt filed his § 2255 petition on November 20, 2017. He amended the petition shortly thereafter, on December 1, 2017. Briefing and some discovery ensued. On July 17, 2018, Brunt sought leave to file a second amended petition; the Court granted that motion and took additional briefs on the petition as amended. The amendments do not contain new claims, but merely additional arguments concerning the existing claims. On September 20, 2018, Brunt moved for leave to file a third amended petition to assert eight claims. The government objects to the motion as to five of the claims on the ground that they do not relate back to the original petition and are therefore untimely.

         Rule 12 of the Rules Governing Section 2255 Proceedings for the United States District Courts permits application of the Federal Rules of Civil Procedure in § 2255 cases "to the extent that they are not inconsistent with any statutory provisions or [the § 2255] rules." Federal Rule of Civil Procedure 15, which governs amendments to pleadings, provides that pleadings may be amended once as a matter of course without seeking leave of court. Fed.R.Civ.P. 15(a)(1). Thereafter, parties may amend their pleadings only with the opposing party's written consent or the court's leave, which should be freely given "when justice so requires." Fed.R.Civ.P. 15(a)(2). The claims in the amended pleading, however, must relate back to the original pleading. Fed.R.Civ.P. 15(c).

         There is a one-year limitations period for postconviction challenges to federal convictions. 28 U.S.C. § 2255(f). After the statute of limitations has run, amendments to a pleading relate back to the original pleading if the original and amended pleadings arise out of the same "conduct, transaction, or occurrence." Fed.R.Civ.P. 15(c)(1)(B). An amendment to a § 2255 petition does not relate back (and thereby escape the one-year statute of limitations) merely because it relates to the same trial, conviction, or sentence as a timely-filed claim. Beason v. Marske, 926 F.3d 932, 938 (7th Cir. 2019) (citing Mayle v. Felix, 545 U.S. 644, 662 (2005)). To relate back, the new claims must be based on the same "common core of operative facts" as the original claims. Id.

         The first four grounds of Brunt's original § 2255 petition are claims that trial counsel were constitutionally ineffective. Brunt contends that Jeffrey Steinback, Lawrence Beaumont, and Raymond Pijon were ineffective for failing to learn that the mortgage companies described in the indictment were not insured by the Federal Deposit Insurance Corporation ("FDIC") and failing to move to dismiss the indictment on that basis (Ground One); that Pijon and Joshua Sachs were ineffective for failing to challenge the jury instructions as to a "financial institution" (Ground Two); that Steinback, Beaumont, Pijon, and Sachs were ineffective for failing to convey a formal plea offer to him (Ground Three); and that Steinback and Beaumont were ineffective for misleading him into submitting to pretrial proffer sessions, and Pijon and Sachs were ineffective for failing to move to strike or otherwise object to use of the proffer (Ground Four). Brunt also contends that his appellate counsel, Brian Mullins, was ineffective for failing to argue on appeal that the jury instructions improperly defined a financial institution (Ground Five). (ECF No. 1, Pet.; ECF No. 19, Pet'r's Reply.)

         Brunt now seeks to assert the following eight claims: trial counsel were ineffective for stipulating that the financial institutions allegedly defrauded were FDIC-insured institutions, which led to an erroneous jury instruction (Ground One); trial counsel were ineffective for failing to move for a severance from the trial of Brunt's codefendant Charles Murphy after it was learned that Murphy had sought to hire a hit man to kill Brunt and his codefendant Tracey Scullark, with whom Brunt is in a long-term relationship (Ground Two); (3) trial counsel were ineffective for failing to convey a formal plea offer (Ground Three); (4) trial counsel were ineffective with respect to the proffer sessions (Ground Four); appellate counsel John Sullivan was ineffective for "abandoning]" Brunt after remand, thus causing Brunt to "lose" his right to appeal the Court's amended judgment (Ground Five) and causing Brunt to lose the opportunity to argue that he was entitled to a reduced sentence on remand pursuant to Amendment 792 to the Guidelines (Ground Six);[1] trial counsel were ineffective for failing to object to the sentencing enhancement for the use of sophisticated means and for failing to argue that Brunt was only a "minor participant" in the scheme (Ground Seven); and trial counsel were ineffective for failing to timely object to, or cross-examine on, a codefendant's presentation of inculpatory evidence against Brunt (Ground Eight). (ECF No. 45-1, 3d Am. Pet.)

         The government contends that the Court should deny Brunt leave to amend as to proposed Grounds Two, Five, Six, Seven, and Eight. The Court agrees. The original claims pertain to the FDIC-insured status of entities at issue in the indictment and argument on the definition of a financial institution; the alleged failure to convey a formal plea offer; and alleged ineffectiveness with regard to the proffer. Grounds Two, Five, Six, Seven, and Eight pertain to severance; appeal of the amended judgment; sentence reduction pursuant to Amendment 792; failure to object to sentencing amendments; and failure to object to inculpatory evidence at trial. These claims are supported by facts that are distinct "in both time and type," see Mayle, 545 U.S. at 650, from those set forth in the original petition. Therefore, they do not relate back to the original petition (which was filed shortly before the limitations period ran), and are thus time-barred.

         The government does not object to the amendment of Brunt's petition as to Grounds One, Three, and Four of the proposed third amended petition, and those claims are based on the same core of facts as Grounds One, Two, Three, and Four of the original petition. Indeed, the claims are largely the same; Brunt has simply expanded on some of his arguments. The Court has considered all of the arguments Brunt presents as to Grounds One, Three, and Four of the proposed third amended petition and the five grounds of the original petition, whether set out in the original petition or subsequent amendments, and will discuss them below.

         Accordingly, the Court grants Brunt's motion for leave to file a third amended § 2255 petition as to proposed Grounds One, Three, and Four, and denies the motion as to proposed Grounds Two, Five, Six, Seven, and Eight.

         B. Section 2255 Petition

         Section 2255 allows a defendant to move to vacate, set aside, or correct a sentence that was imposed in violation of the Constitution or laws of the United States, was imposed by a court that lacked jurisdiction, was in excess of the maximum authorized by law, or is otherwise subject to collateral attack. 28 U.S.C. § 2255(a). 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. § 2255(b). 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); see also Almonacid v. United States, 476 F.3d 518, 521 (7th Cir. 2007) (§ 2255 relief "is an extraordinary remedy because it asks the district court essentially to reopen the criminal process to a person who already has had an opportunity for full process").

         Ineffective-assistance claims are analyzed under the two-part Strickland test. United States v. Lindsay, 157 F.3d 532, 534 (7th Cir. 1998) (citing Strickland v. Washington, 466 U.S. 668, 688 (1984)). Under Strickland, Brunt must show (1) deficient performance, i.e., that counsel's representation fell below an objective standard of reasonableness, and (2) that as a result Brunt was prejudiced, such that there is a reasonable probability that, but for counsel's unprofessional errors, the outcome of the proceeding would have been different. See United States v. Jansen, 884 F.3d 649, 655-56 (7th Cir. 2018). "Because counsel is presumed effective, a party bears a heavy burden in making a winning claim based on ineffective assistance of counsel." Shell v. United States, 448 F.3d 951, 955 (7th Cir. 2006) (internal punctuation and citation omitted). A petitioner must identify specific acts or omissions that are alleged to have fallen below professional norms. Strickland, 466 U.S. at 690. If one prong of the Strickland test is not satisfied, it is unnecessary to reach the other prong. Id. at 697.

         1. Grounds One, Two, and Five[2] - Financial Institutions

         In certain of the mail and wire fraud charges of which Brunt was convicted, the government alleged that the conduct at issue affected or influenced "financial institutions," in that defendants defrauded several banks and mortgage-lending institutions, among them Wells Fargo Bank, N.A.; Wells Fargo Home Mortgage; National City Bank; National City Mortgage; and JP Morgan Chase Bank. (Case No. 07 CR 853, ECF No. 183, 5th Superseding Indictment.) The indictment further alleged in relevant part that Wells Fargo Home Mortgage was the mortgage-lending division of Wells Fargo Bank, a financial institution, the deposits of which were insured by the FDIC; National City Mortgage was the mortgage-lending division of National City Bank, a financial institution, the deposits of which were insured by the FDIC; and Chase Manhattan Mortgage Corporation was the mortgage-lending division of JP Morgan Chase Bank, a financial institution, the deposits of which were insured by the FDIC. (Id. at 3.) At trial, the defense stipulated that Wells Fargo Bank, National City Bank, and Chase/First American Bank were financial institutions insured by the FDIC. (Case No. 07 CR 853, ECF No. 620, Trial Tr. of Mar. 14, 2013, at 2614.)

         For the fraud counts, the jury was instructed that the government was required to prove beyond a reasonable doubt that, among other things, the scheme "affected a financial institution"; a "financial institution" includes an entity that is insured by the FDIC; and a financial institution is "affected" if it is exposed to a new or increased risk of loss. (Case No. 07 CR 853, ECF No. 410, Jury Instrs.) For the money-laundering count, the jury was instructed that the government was required to prove beyond a reasonable doubt that, among other things, Brunt derived money from false statements made to influence an FDIC-insured financial institution, and that the term "financial institution" includes "commercial banks, trust companies, businesses engaged in vehicle sales including automobile sales, a pawn broker, a loan or finance company, and businesses and persons engaged in real estate closings or settlements." (Id.)

         Brunt contends in Ground One that trial counsel were ineffective for failing to properly investigate whether the "mortgage companies" at issue in the superseding indictment were FDIC-insured and thus could be considered "financial institutions." According to Brunt, had counsel so investigated, they would have discovered that the mortgage companies listed in the indictment were not FDIC-insured, so they should not have so stipulated; instead, they should have "challeng[ed] the authenticity of the indictment." (3d Am. Pet. at 1; Pet'r's Reply at 3.) Brunt contends in Ground Two that Pijon and Sachs were ineffective for failing to challenge the money-laundering instruction with respect to the definition of a financial institution, and Brunt asserts in Ground Five that Mullins was ineffective for failing to raise the "financial institutions" issue on direct appeal.

         Relief is not warranted on Grounds One or Five. As the government points out, the fifth superseding indictment alleged that the mortgage-lending divisions of FDIC-insured banks were at issue. Any "investigation" into the FDIC-insured status of Wells Fargo Bank, National City Bank, and JP Morgan Chase Bank would have revealed that those entities were indeed insured by the FDIC. Trial counsel's stipulation was therefore entirely proper. Brunt maintains, however, that the entities involved were not divisions of FDIC-insured banks at the relevant time (the scheme took place from 2002 to 2006), but rather wholly independent subsidiaries that were not FDIC-insured and therefore not "financial institutions." In support of this contention, Brunt cites and attaches to his filings what he calls "public, open source" evidence. (Pet'r's Reply at 5.)

         As to Wells Fargo, Brunt relies on a February 2018 Bloomberg report titled "Company Overview of Wells Fargo Home Mortgage, Inc.," which states that Wells Fargo Home Mortgage, Inc. "operates as a subsidiary of Wells Fargo Bank, National Association." (Id., Ex. A.) The document does not establish the status of Wells Fargo Home Mortgage as a subsidiary, rather than a division, of Wells Fargo Bank in 2002 and 2003, the time the charged conduct occurred. As to National City, Brunt relies on an undated Wikipedia entry that refers to National City Mortgage as a "subsidiary" of National City Corporation. (Id., Ex. B.) Reliability concerns aside, [3] the entry does not support Brunt's contention that National City Mortgage was a subsidiary, rather than a division, of National City Corporation at the time the charged conduct occurred. As to Chase, Brunt relies on a document issued by the Office of the Comptroller of the Currency in 2007. It describes JP Morgan Chase Bank and states that on January 1, 2005, Chase Manhattan Mortgage Company was merged into another Chase entity, Chase Home Finance, LLC. (Id., Ex. C.) Contrary to Brunt's assertion, the document does not establish that the mortgage company was an independent subsidiary of the bank at the time the charged offense occurred. Brunt also relies on a letter from the FDIC, dated December 29, 2017, in which the FDIC states that it does not insure mortgage companies. (Id., Ex. E.) Like Brunt's other submissions, the letter fails to support his "subsidiary" theory; it does not show that the entities charged in the indictment were independent subsidiaries at the time of the charged events. Since Brunt fails to demonstrate that trial counsel were ineffective for failing to further investigate the FDIC-insured status of the entities at issue in the indictment or for failing to argue that they were not "financial institutions," in turn he fails to demonstrate that appellate counsel was ineffective for failing to raise an ineffectiveness claim on these grounds.

         In Ground Two, Brunt maintains that trial counsel should have challenged the money-laundering instruction's definition of "financial institution," because the instruction did not track the language of 18 U.S.C. § 20-a general provision of the criminal code that defines the term "financial institution"-as it existed at the time of the charged conduct. While Brunt is correct that the instruction did not track the language of § 20, an objection on that ground would have failed. The instruction was limited to the money-laundering charge, and it was drawn from the pattern criminal Seventh Circuit Federal Jury Instruction that defined the term "financial institution" for purposes of 18 U.S.C. § 1957, the particular money-laundering statute that Brunt was charged with violating. The Court added a phrase incorporating pawnbrokers and loan or finance companies, pursuant to the committee comment to the pattern instruction, which stated that "[f]inancial institutions are defined in 31 U.S.C. § 5312(a)(2), and specific cases may require giving the statutory language to the jury." Seventh Circuit Federal Jury Instructions-Criminal at 313 (West 1999). Section 5312(a)(2) identifies pawnbrokers and loan or finance companies as "financial institutions." 31 U.S.C. § 5312(a)(2)(0), (P). The instruction did not misstate the law and would not have confused the jury. Therefore, relief is not warranted on Ground Two.

         2. Ground Three - Plea Offer

         Next, Brunt contends that Steinback, Beaumont, Pijon, and Sachs were ineffective for failing to communicate a "formal plea offer" to him. In his original petition, Brunt does not develop this argument. He merely cites a transcript from proceedings "on or about January 7, 2011," which contains a dialogue between the Court and Beaumont. (Pet. at 13.) It is necessary to provide some background. The previous month, Brunt, expressing dissatisfaction with Steinback and Beaumont, had moved to substitute attorneys, and Steinback and Beaumont had moved to withdraw. In a sealed proceeding on January 6, 2011, at which Steinback was not present due to illness, the Court discussed the motions with Beaumont. When the Court inquired about counsel's specific communications with Brunt about a possible plea deal with the government, Beaumont stated that although his understanding was that Steinback and Assistant United States Attorney Brian Netols had "apparently negotiated" a plea agreement, and that "basically [the government was] going to agree to whatever demands Mr. Steinback was making to get in the plea agreement," Beaumont "didn't have anything to do with the direct negotiations with the government at all." (Case No. 07 CR 853, ECF No. ...


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