Dugan v. U.S.

• Decision Date: 09 March 1994
• Docket Number: No. 93-1844,93-1844
• Citation: 18 F.3d 460
• Parties: Michael T. DUGAN, II, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 460

18 F.3d 460

Michael T. DUGAN, II, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 93-1844.

United States Court of Appeals Seventh Circuit.

Argued Nov. 30, 1993.

Decided March 9, 1994.

Kevin McShane (argued), McShane & Gordon, Indianapolis, IN, for petitioner-appellant.

Larry A. Mackey, Asst. U.S. Atty. (argued), Indianapolis, IN, for respondent-appellee.

Before LAY, ^* COFFEY and ROVNER, Circuit Judges.

COFFEY, Circuit Judge.

Michael T. Dugan, II, appeals the denial of his motion to vacate, set aside, or correct his sentence. We affirm.

BACKGROUND

Michael Dugan, II, while serving as an Indiana state trial judge, was indicted in December 1988 for racketeering, mail fraud, wire fraud, extortion, bribery, tax fraud, and tax conspiracy charges. The evidence presented established that Dugan appointed his friends as receivers and appraisers in cases pending before him and thereafter "demanded" cash kickbacks for every receivership and appraisal fee Dugan authorized. In addition to the kickback arrangements, the evidence demonstrated that Dugan extorted payments from executives of Underwriters National Assurance Company ("Underwriters"), a troubled insurance company which was the subject of a rehabilitation lawsuit pending in Dugan's court for ten years. Dugan used his supervisory powers to select or approve Underwriters's chairmen of the boards of trustees and directors and the company's presidents, marketing managers, and legal counsel, made clear in United States v. Dugan, 902 F.2d 585, 587 (7th Cir.1990), where we stated that "[h]e also fixed the compensation levels for these individuals, drafted their employment or agency contracts, [and] ... fired executives when they displeased him[.]" Robert Eichholtz, Dugan's close friend and Underwriters's chairman of the boards of directors and of the trustees, was Dugan's co-conspirator. Eichholtz stated to David Phipps and James Riggs, two Underwriters executives, that he Nancy Eichholtz, a government witness, testified that her husband Robert Eichholtz (recently deceased) made monthly payments of $1,000 to Dugan, and that her husband had told her that others were also giving Dugan money. Neither Dugan nor the prosecution questioned Mrs. Eichholtz about two agreements she had made with the prosecution to testify against Dugan. ¹ Mrs. Eichholtz's agreements with the United States Attorney's office were included in the government's exhibits and its admissibility was stipulated to by both parties before trial.

was paying Dugan to keep his position and that they would also be required to make contributions or payments if they wished to retain their positions. Over a nine year period, Dugan extorted $190,000 from Underwriters executives by inflating their salaries in order that they might make kickback payments to him to retain their jobs.

The jury convicted Dugan of racketeering, extortion, and mail, wire, and tax fraud and the court sentenced him to eighteen years in prison. As part of his sentence, Dugan was also ordered to make restitution and to forfeit certain property interests derived from his racketeering activity. Dugan appealed, "argu[ing] that he was denied his right to confront witnesses guaranteed by the sixth amendment because crucial statements of an unavailable co-conspirator were admitted. Specifically, he maintains that statements of Robert Eichholtz, who died prior to trial, were crucial to the case against him and lacked adequate indicia of reliability." Dugan, 902 F.2d at 589. He also contended that the evidence presented at trial was insufficient to support his conviction for mail fraud because the government, as required under McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), failed to establish that his scheme resulted in the loss of property, expectation of a property right, or other concrete economic interest. This court affirmed his convictions after concluding that because Mr. Eichholtz was Dugan's co-conspirator, Mr. Eichholtz's statements were admissible under the co-conspirator provisions of Federal Rule of Evidence 801(d)(2)(E) and that "where a statement is admissible under Rule 801(d)(2)(E), there can be no Confrontation Clause violation." Dugan, 902 F.2d at 590 (quoting United States v. Shoffner, 826 F.2d 619, 630 n. 14 (7th Cir.), cert. denied Strange v. United States, 484 U.S. 958, 108 S.Ct. 356, 98 L.Ed.2d 381 (1987)). We also rejected Dugan's sufficiency of the evidence argument because the evidence was "overwhelming" that Dugan's actions resulted in the loss of property, expectation of a property right, or other concrete economic interest. Dugan, 902 F.2d at 591. ²

On March 23, 1992, Dugan filed a motion pursuant to 28 U.S.C. Sec. 2255 and requested an evidentiary hearing on the motion. Dugan alleged inter alia 1) that the prosecution failed to disclose the agreements it had reached with Nancy Eichholtz, in contravention of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and 2) that he had received ineffective assistance of trial counsel because of his attorney's failure to object to the introduction of hearsay statements, letters from Mr. Eichholtz, and failure to cross-examine Mrs. Eichholtz regarding her agreement with the government. Dugan failed to raise either of these claims on direct appeal. The district court after review found that the prosecution had fully disclosed its agreements with Mrs. Eichholtz. With regard to Dugan's ineffectiveness allegation, the court found that "considering the

                particular nature of the specifications of ineffectiveness ... Dugan's claim of ineffective assistance of trial counsel could have, and should have been raised on [direct] appeal."   Notwithstanding Dugan's waiver for failure to raise his ineffective assistance of counsel allegations on direct appeal, the district judge addressed and rejected Dugan's claims on the merits, concluding that "by every measure known to this judge, Dugan's trial was eminently fair;  it certainly was not flawed by deficient performance of counsel, especially in light of the fact that Dugan, himself a lawyer and a judge, was present and fully participated in his own defense throughout the trial."   The court denied Dugan's Sec. 2255 motion and refused his request for an evidentiary hearing
                

ISSUES

Dugan raises three issues on review: 1) whether the district court erroneously determined that the prosecutor's disclosure of its agreement with Mrs. Eichholtz was sufficient and therefore not in violation of Brady; 2) whether the court erroneously resolved his ineffective assistance of counsel claim; and 3) whether the court erred in denying him an evidentiary hearing on his claims.

DISCUSSION

I. Alleged Brady Violation

Prior to trial, Dugan's attorney filed a Brady motion and the court ordered that the government provide Dugan with "[a]ny agreements, written or otherwise, or understandings by the government with any witnesses relating to their testimony." Dugan alleges the government failed to timely disclose that it had reached an agreement with Nancy Eichholtz. He contends that it was not possible for him to raise this issue on direct appeal because he did not learn of the existence of the agreement until after the decision in his direct appeal.

Dugan's argument that the government failed to disclose its agreement with Eichholtz's wife fails because the record reflects that prior to trial the government submitted to Dugan and his counsel Government Exhibits 807 and 808, the two documents which embody the government's agreement with Mrs. Eichholtz. In fact, upon questioning Dugan conceded to the district court that "Government's Exhibits 807 and 808 amount to a full disclosure of the Government's relationship with [Mrs. Eichholtz]." Dugan and his trial attorney acknowledged the existence of Exhibits 807 and 808 when, prior to trial, they each signed a document entitled "Stipulations to Government Exhibits" which read in part that "[t]he parties hereby stipulate and agree that the below-numbered Government Exhibits are admissible for all purposes: ... 800-825[,] 828-833[,] 850A-850F[.]" Dugan's stipulation that Exhibits 800-825, including Exhibits 807 and 808, were admissible in evidence, clearly establishes that the Brady violation argument is without merit. To the extent that Dugan continues to contend that prior to trial he was not aware of the government's agreement with Mrs. Eichholtz, we remind Dugan that the district court resolved this factual question against Dugan, and "[i]t is not the function of this court to reweigh the evidence or to substitute its judgment for that of the trier of fact." United States v. Wisniewski, 741 F.2d 138, 144 (7th Cir.1984). We agree with the district judge's observation that "[i]t is beyond credulity that Dugan was either unaware of the contents of Exhibit 807 and 808 or indifferent, for whatever reason, to their contents.... Dugan is bound by his stipulation." We reject Dugan's argument that the government failed to timely disclose the agreement it formed with Mrs. Eichholtz.

II. Ineffective Assistance of Counsel

Now on appeal Dugan for the first time contends that his trial counsel was ineffective. We set forth the requirements for establishing ineffective assistance of counsel in United States v. Delgado, 936 F.2d 303, 310 (7th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 972, 117 L.Ed.2d 137 (1992), wherein we stated:

"The defendant bears a heavy burden in establishing an ineffective assistance of counsel claim. He must show (1) that the attorney's representation fell below an objective standard of reasonableness (performance prong), Strickland v. Washington, 466 U.S. 668, 688, 104 S.Ct. 2052, 2065, 80 Delgado, 936 F.2d at 310 (quoting United States v. Moya-Gomez, 860 F.2d 706, 763-64 (7th Cir.1988), cert. denied, 492 U.S. 908, 109 S.Ct. 3221, 106 L.Ed.2d 571 (1989)). Specifically, Dugan claims his trial couns...