Efraim Diveroli, Aey, Inc. v. United States

• Decision Date: 09 October 2015
• Docket Number: No. 14–11576.,14–11576.
• Citation: 803 F.3d 1258
• Parties: Efraim DIVEROLI, AEY, Inc., Petitioners–Appellants, v. UNITED STATES of America, Respondent–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

803 F.3d 1258

Efraim DIVEROLI, AEY, Inc., Petitioners–Appellants

v.UNITED STATES of America, Respondent–Appellee.

No. 14–11576.

United States Court of Appeals, Eleventh Circuit.

Oct. 9, 2015.

Michelle Walsh, Law Offices of Michelle R. Walsh, PA, Miami, FL, for Petitioners–Appellants.

Kathleen Mary Salyer, Eloisa Delgado Fernandez, Wifredo A. Ferrer, Jeanne Marie Mullenhoff, Anne Ruth Schultz, U.S. Attorney's Office, Miami, FL, for Respondent–Appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before MARCUS, WILLIAM PRYOR, and JILL PRYOR, Circuit Judges.

Opinion

WILLIAM PRYOR, Circuit Judge:

Efraim Diveroli's story is so outlandish that it has inspired an article in Rolling Stone, a book, and a forthcoming comedy film. See Guy Lawson, How Two Stoner Kids from Miami Beach Became Big-Time Arms Dealers—Until the Pentagon Turned on Them, Rolling Stone, Mar. 31, 2011, at 52; Guy Lawson, Arms and the Dudes: How Three Stoners from Miami Beach Became the Most Unlikely Gunrunners in History (2015); Borys Kit, Jonah Hill to Star in Crime Comedy ‘Arms and the Dudes,’ The Hollywood Reporter (Dec. 3, 2014, 4:56 PM), http://www.hollywoodreporter.com/news/jonah–hill–star–crime–comedy–753760. By age 21, Diveroli started his own company, became an international arms dealer, and won a $298 million contract with the United States Army to provide ammunition to Afghanistan. But his meteoric rise would not last. The contract prohibited Diveroli's company, AEY, from acquiring ammunition from Chinese manufacturers. When Diveroli learned that his primary supplier obtained its ammunition from China, he and his cohorts concealed the origin of the ammunition and falsely attested that it was from Albania. A grand jury indicted Diveroli, AEY, and his coconspirators on 85 counts of major fraud, wire fraud, and conspiracy to commit fraud. After Diveroli's attorney advised his client about the charges and estimated that he faced a sentence of 168 to 210 months if convicted, Diveroli pleaded guilty to one count of conspiracy for which the district court sentenced him to 48 months of imprisonment.

Diveroli moved to vacate his sentence, 28 U.S.C. § 2255, on the ground that his attorney miscalculated his potential sentencing exposure, which Diveroli argues was only 70 to 87 months. Diveroli argues that he would have proceeded to trial but for his counsel's error. The district court denied his motion without an evidentiary hearing. Because the record establishes that Diveroli faced overwhelming evidence of guilt and had no viable defenses, we affirm.

I. BACKGROUND

Diveroli was the president and owner of AEY, Inc., a Florida corporation that, from 2006 to 2007, was engaged in the business of procuring arms and ammunition. In January 2007, the United States Army Sustainment Command awarded AEY a contract worth $298 million to provide ammunition to the Islamic Republic of Afghanistan. The contract prohibited AEY from obtaining any ammunition “ ‘directly or indirectly’ from Communist Chinese military companies.”

After Diveroli learned that AEY's Albanian supplier, Military Export and Import Company, obtained ammunition originally manufactured in China, he made the following inquiry to the United States Department of State: “We have been offered Chinese ammunition that has been sitting for about 20 years with a company in Albania. Is it legal for us (as a U.S. company) to broker this material?” The State Department replied, “U.S. policy, per part 126.1(a) of the [International Traffic in Arms Regulations] ... would not authorize the transaction. Exceptions to the policy require a presidential determination.” Diveroli then asked if there was any exception that would allow the sale of Chinese ammunition if it was stored in a friendly country for a sufficient period of time. The State Department responded, “[T]here is no way that the transaction which you propose could be so justified.”

After receiving these emails, Diveroli and his cohorts decided to conceal the source of the ammunition. They first considered painting over the metal cases that had Chinese writing and scraping the Chinese markings off of the wood crates. They eventually decided to repackage the Chinese ammunition in cardboard boxes to conceal its source. AEY delivered approximately 35 shipments of Chinese ammunition in partial fulfillment of the contract, and the Army paid AEY over $10 million. The contract required AEY to attach a certificate of conformance to each shipment. In each certificate, Diveroli attested that the shipment conformed in all respects to the terms of the contract and identified Albania's Military Export and Import Company as the “Manufacturer (point of origin).”

When federal agents discovered the deception, AEY had already delivered $6.5 million worth of ammunition. The Army terminated the contract with AEY and sustained costs of over $40,000 to reissue the contract to another supplier. AEY derived profits of approximately $360,000 from the sale of the nonconforming ammunition.

A grand jury indicted AEY and Diveroli on 85 and 84 counts respectively. The indictment charged AEY and Diveroli with 35 counts of making false statements to a federal agency, 18 U.S.C. § 1001(a)(2) ; 35 counts of major fraud against the United States, id. § 1031; and 13 counts of wire fraud, id. § 1343. The indictment charged AEY with an additional count of wire fraud. It also charged AEY and Diveroli with one count of conspiracy to commit the substantive offenses, id. § 371.

Diveroli and AEY, through Diveroli, pleaded guilty to conspiracy in exchange for the dismissal of the substantive counts. The parties agreed that the relevant loss amount for sentencing purposes was more than $400,000 and less than $1,000,001. See United States Sentencing Guidelines Manual § 2B1.1(b)(1). The plea agreement barred Diveroli and AEY from seeking a sentence below the guidelines range and from appealing their sentences or collaterally attacking their sentences under section 2255.

The presentence investigation report calculated a base offense level of 6, a 14–level increase for a loss amount more than $400,000 and less than $1,000,001, a 2–level increase because a substantial part of the fraudulent scheme was committed outside the United States, and a 4–level increase for Diveroli's role as a leader or organizer. The district court reduced the offense level by 2 for acceptance of responsibility. Diveroli's final offense level was 24, his criminal history category was I, and his guidelines range was 51 to 63 months, with a statutory maximum of 60 months, see 18 U.S.C. § 371.

The district court sentenced Diveroli to 48 months of imprisonment, followed by three years of supervised release, and it ordered him to pay restitution and a criminal fine. The district court sentenced AEY to two years of probation, a $500,000 criminal fine, and restitution.

Diveroli and AEY filed a motion to vacate their convictions and sentences, 28 U.S.C. § 2255. They argued that Diveroli's counsel had been ineffective under the Sixth Amendment because he miscalculated Diveroli's sentencing exposure. They alleged that Diveroli's counsel estimated his sentencing exposure to be 168 to 210 months, based on a loss amount of up to $30 million. They argued that this advice was erroneous because Diveroli's sentencing exposure at trial would have been 63 to 70 months under the correct loss amount. Diveroli and AEY alleged that had it not been for the incorrect advice, they would have proceeded to trial. They requested an evidentiary hearing on their claims. The district court denied the motion, and we granted a certificate of appealability with respect to the following question: “Whether the district court erred in denying, without an evidentiary hearing, Diveroli's claim that his counsel rendered ineffective assistance by incorrectly advising him what his sentencing exposure would be if he proceeded to trial and was convicted.”

II. STANDARDS OF REVIEW

We review the denial of an evidentiary hearing for abuse of discretion. Aron v. United States, 291 F.3d 708, 714 n. 5 (11th Cir.2002). “A district court abuses its discretion if it applies an incorrect legal standard, applies the law in an unreasonable or incorrect manner, follows improper procedures in making a determination, or makes findings of fact that are clearly erroneous.” Winthrop–Redin v. United States, 767 F.3d 1210, 1215 (11th Cir.2014) (quoting Citizens for Police Accountability Political Comm. v. Browning, 572 F.3d 1213, 1216–17 (11th Cir.2009) ) (internal quotation marks omitted). “When we review the denial of a motion to vacate, we review legal conclusions de novo and findings of fact for clear error.” Stoufflet v. United States, 757 F.3d 1236, 1239 (11th Cir.2014) (citation omitted).

III. DISCUSSION

As an initial matter, we dismiss AEY from this appeal. The certificate of appealability does not mention the judgment of conviction and sentence against AEY. And under section 2255, a movant must be “[a] prisoner in custody under sentence of a [federal] court.” 28 U.S.C. § 2255(a). “Because a corporation cannot be held in custody, [it] cannot obtain relief under § 2255.” United States v. Rad–O–Lite of Philadelphia, Inc., 612 F.2d 740, 744 (3d Cir.1979). AEY instead must file a petition for a writ of error coram nobis to challenge its conviction collaterally. See id.; see also United States v. Morgan, 346 U.S. 502, 511, 74 S.Ct. 247, 252, 98 L.Ed. 248 (1954) (“We do not think that the enactment of § 2255 is a bar to [a] motion [for writ of error coram nobis]....”).

Diveroli argues that his counsel's miscalculation of his sentencing exposure violated his right to effective counsel under the Sixth Amendment and that the district court should have granted him an evidentiary hearing to prove this claim. To prevail on his claim under the Sixth Amendment, Diveroli must establish that his “counsel's representation fell below an objective standard of reasonableness” and...