Carnesi v. United States

• Decision Date: 18 March 2013
• Docket Number: No. 11–CV–1044 (ADS).,11–CV–1044 (ADS).
• Parties: Kenneth CARNESI, Petitioner, v. UNITED STATES of America, Respondent.
• Court: U.S. District Court — Eastern District of New York

933 F.Supp.2d 388

Kenneth CARNESI, Petitioner,

v.UNITED STATES of America, Respondent.

No. 11–CV–1044 (ADS).

United States District Court, E.D. New York.

March 18, 2013.

Kenneth Carnesi, Garden City, NY, pro se.

Loretta E. Lynch, United States Attorney, Eastern District of New York, by: Burton T. Ryan, Jr., Assistant United States Attorney, Central Islip, NY, for the Respondent.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

The Petitioner Kenneth Carnesi (“the Petitioner”) is seeking a writ of error coram nobis pursuant to the All Writs Act, 28 U.S.C. § 1651, challenging an order of restitution imposed by the Court on October 14, 2005. The Petitioner claims he is entitled to coram nobis relief because restitution was imposed in violation of the procedures set forth in the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663(a); specifically, failure to identify victims and their respective actual amounts of loss. For the reasons set forth below, the Petitioner's application for coram nobis relief is granted.

I. BACKGROUND

A. Procedural History

The Petitioner is a former attorney and president of business consulting firms. From about October 27, 1986 to May 30, 2001, he conspired with a London counterpart to defraud European small businesses out of millions of dollars by utilizing two “advance fee” schemes. In the first scheme, the Petitioner and his co-conspirator fraudulently sold bogus United States backed securities to European business investors. In the second scheme, in exchange for fees, the Petitioner and his co-conspirator made fraudulent offers of insurance to small businesses to assist the businesses in obtaining loans from American financial institutions. The securities and insurance policies were never issued, and no business loans were ever made. The Petitioner and his co-conspirator then laundered the proceeds they received from the various mail frauds and wire frauds of the fraudulent scheme through bank accounts in Switzerland, the United Kingdom and the United States.

On April 21, 2004, pursuant to a cooperation agreement, the Petitioner pled guilty to conspiracy to commit money laundering, a Class C felony, in violation of 18 U.S.C. § 1956(a)(1)(A)(i), B(i) and (h). On October 14, 2005, the Petitioner was sentenced in the United States District Court for the Eastern District of New York to a term of incarceration of seventy (70) months and a term of supervised release of thirty-six (36) months. In addition, an Order of Restitution was issued for $5,422,000.00. In this regard, the Petitioner was directed to pay 10% of his gross monthly income until the full amount of restitution was paid, even after his term of supervised release had been terminated. The payments were not to begin until sixty (60) days after his release from incarceration.

Prior to the October 14, 2005 sentencing, on February 25, 2005, a Presentence Investigation Report was prepared by United States Probation Officer Andrew M. Jingleleski (“Officer Jingleleski”). In relevant part, the Presentence Investigation Report stated:

The loss stemming from the count of conviction is $7,500,000. To date, the Government has not provided the names, addresses, or individual losses associated with the victims of this offense. It is noted that there are in excess of 50 victims in the instant offense. Per guidance found in United States v. Catoggio, 326 F.3d 323 (2d Cir.2003), restitution should not be ordered where the victims are unidentified.

....

As the instance offense occurred after April 24, 1996, restitution is mandatory per 18 U.S.C. § 3663A and Guideline 5E1.1. The [Petitioner] is responsible for restitution in the amount of $7,500,000; however, to date, the Government has been unable to provide the identities of the individual victims and their respective losses. Per guidance found in United States v. Catoggio, 326 F.3d 323 (2d Cir.2003) restitution should not be ordered where the victim is not identified. Additionally, if the victim's identity is known to the Government and this information is not provided to the Probation Department within ten days of sentencing, per 18 U.S.C. § 3664(d)(5), the Court may hold an evidentiary hearing within 90 days after sentencing.

(Presentence Investigation Report, ¶¶ 12, 62.)

After filing the initial report, on April 29, 2005, Officer Jingleleski prepared an addendum to the Presentence Investigation Report, which corrected the loss amount from $7,500,000.00 to $5,442,000.00. This latter figure was agreed upon by the Petitioner and the Government and was “based upon the total amount of funds transferred to accounts to which the [Petitioner] had access.” (Addendum, pg. 1.) However, the Government was still “unable to provide the identities of the individual victims and their respective losses.” (Addendum, pg. 2.)

At the October 14, 2005 sentencing of the Petitioner, the Government represented that, contrary to the Presentence Investigation Report, they were able to identify victims of the Petitioner's criminal conduct and had a list of almost 70. Most of the victims lived in Mexico or overseas in Europe. The Government represented that they had notified the victims of the sentencing, but that they could not attend because they lived outside the United States. However, they did request restitution. Thus, the Government recommended that the Court issue a restitution order with respect to the loss amount of $5,422,000.00. After sentencing, the United States Probation Department would be given the individual particulars so they could distribute any monies that were collected.

For his part, the Petitioner stated that he was satisfied with the representation that was provided to him by his attorney. The Petitioner's defense counsel voiced no opposition to the Order of Restitution issued by the Court. Further, neither the Petitioner nor his attorney appealed from the Court's Order.

On November 1, 2006, the Petitioner filed a pro se habeas petition, pursuant to 28 U.S.C. § 2255, challenging the Order of Restitution imposed by this Court. The Petitioner argued (1) ineffective assistance of counsel based on his defense counsel's failure to challenge the imposition of the Order of Restitution; failure to request an evidentiary hearing concerning the identification of alleged victims and the actual amount of loss; and failure to file a notice of appeal and (2) district court error in the imposition of the Order of Restitution in violation of the procedures set forth in the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663(a).

On November 17, 2009, the Court denied the Petitioner's § 2255 petition on the grounds that (1) such a petition, in general, cannot be used for the sole purpose of challenging orders of restitution; (2) the Order of Restitution was not so burdensome that it amounted to a restraint on the Petitioner's liberty; and (3) the Court did not have subject matter jurisdiction to determine whether the Petitioner's counsel was ineffective. See Carnesi v. United States, 06–CV–5917 (ADS), 2009 WL 3837948, 2009 U.S. Dist. LEXIS 107205 (E.D.N.Y. Nov. 17, 2009). No appeal was taken from this decision.

B. The Instant Action

On March 2, 2011, while still incarcerated, the Petitioner, pro se, brought the instant action seeking a writ of error coram nobis, pursuant to the All Writs Act, 28 U.S.C. § 1651. He challenges the October 14, 2005 Order of Restitution on the grounds that the Court failed to identify the victims and the actual amount of loss as required under the MVRA. As such, he requests the Court issue an order vacating and setting aside the Order of Restitution. In the alternative, the Petitioner asserts a claim for ineffective assistance of counsel for his defense counsel's failure to file a notice of appeal and requests that the Court either (1) grant the Petitioner his right of appeal of the Order of Restitution nunc pro tunc; or (2) enter a new judgment imposing the same sentence in open Court with defense counsel present.

On July 29, 2011, this Court issued an Order to Show Cause directing the Government to show cause as to why a writ of error coram nobis should not be issued. On August 25, 2011, the Government issued its opposition to the Petitioner's writ of error coram nobis petition. In its opposition, the Government noted that affidavits of loss were mailed to victims identified by the government and copies submitted to the Probation Department. Though that procedure was not done until after the petitioner['s] sentence the information came years before any restitution was due.... [B]ecause at most only harmless error has occurred due to the government not identifying the victims within the MVRA's time frame, [the Petitioner] cannot meet the burden of demonstrating fundamental error to warrant coram nobis relief.

(Gov't Opp., pg. 4.) Further, the Government pointed out that at sentencing, the Government refuted the statement in the Presentence Investigation Report that the victims could not be identified. Indeed, in this regard, the Government represented at the sentencing hearing that more than 70 victims had been identified. Also at the sentence hearing, the Government clarified that the amount of the loss was $5,442,000.00, and not $7,5000.00.00. The Petitioner's defense counsel did not contest these factual assertions by the Government. ( See Tr. of 10/14/05 Sentencing, pg. 2–3, 5–6.)

On or about March 9, 2012, the Petitioner was released from incarceration. Under the terms of the October 14, 2005 Order of Restitution, his restitution payments were scheduled to begin sixty (60) days following his release.

On July 24, 2012, having reviewed the petition in accordance with both the All Writs Act and the procedures set forth in the MVRA, the Court issued an order in which it determined that it required further information before it could address the merits of the petition. As such, the Court ordered the Government, on or before July 30, 2012...