Haase v. U.S., 85-3194

• Decision Date: 29 August 1986
• Docket Number: No. 85-3194,85-3194
• Parties: Marvin G. HAASE, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 123

800 F.2d 123

Marvin G. HAASE, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 85-3194.

United States Court of Appeals, Seventh Circuit.

Argued June 17, 1986.

Decided Aug. 27, 1986.

As Amended Aug. 29, 1986.

John H. Bisbee, Macomb, Ill., for petitioner-appellant.

L. Lee Smith, Asst. U.S. Atty., Peoria, Ill., for respondent-appellee.

Before WOOD, POSNER and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

On July 3, 1985, appellant Marvin G. Haase pleaded guilty to two counts of knowingly making false statements for the purpose of influencing a federally insured financial institution in violation of 18 U.S.C. Sec. 1014. Two weeks later, Haase, using the services of a different attorney, filed a motion under 28 U.S.C. Sec. 2255 seeking to vacate his plea on the grounds of incompetency of counsel and inadequacy of the plea. The district judge denied relief, finding that his taking of the plea, while not in complete accord with Federal Rule of Criminal Procedure 11, was adequate and that, while Haase's representation fell below the standards of Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), petitioner had failed to establish the necessary prejudice required by Hill v. Lockhart, --- U.S. ----, 106 S.Ct. 366, 88 L.Ed.2d 203 (1985). We affirm these conclusions but reverse and remand for further consideration of Haase's motion for reconsideration of sentence.

I.

In the mid 1970s, Marvin Haase was a successful businessman involved in a variety of commercial enterprises in central Illinois. He had a good banking relationship with the Monmouth Trust and Savings Bank of Monmouth, Illinois, that included a $495,000 line of credit. Sometime during 1975, officials of the Monmouth Production Credit Association (PCA), an agricultural cooperative funded in part by the United States Farm Credit Administration, persuaded Haase to change lending institutions. Unfortunately, in the late 1970s, Haase suffered some serious setbacks. Officials from the PCA told Haase in 1978 that they would "see him through" his financial difficulties. Apparently more anxious to lend money than the law allowed, the PCA officials lent Haase money in 1978 to invest in the American Buyer's Club, an investment group that did not invest in agriculture. Sometime after 1978, it became clear to the PCA officials that they had not been legally authorized to make the nonagricultural loans. The PCA officials were able to get Haase to sign documents purporting to authorize the PCA officials to invent agricultural collateral for his nonagricultural line of credit. Sometime after 1979, the PCA officials lent money to Haase based on signed financial statements that indicated that Haase had certain agricultural collateral that he did not in fact have. There is some dispute about the extent to which the PCA officials induced Haase to sign the documents, but it is clear that they did have a substantial role in the falsification of the documents. It is these documents that formed the basis of the indictment against Haase.

In 1984, Haase met Hubert W. Woodruff, an attorney who represented some individuals who wanted to invest in one of Haase's business ventures. Haase and Woodruff became friends. Woodruff began advising Haase in his dealings with the PCA. At that point, the PCA had already secured a state court judgment against Haase. As Haase's financial difficulties became insurmountable (including his substantial debt to PCA), Woodruff advised Haase to file a Chapter 7 bankruptcy petition. The PCA argued to the bankruptcy court that Haase's debt to the PCA should not be discharged because they alleged that the obligation had been procured by fraud. On March 22, 1985, Woodruff advised Haase that he had no defense to the PCA's argument. Following Woodruff's advice, Haase entered into a stipulation that his debt of $750,000 to the PCA was nondischargeable.

Three days later, Assistant United States Attorney Mark Stuaan, apparently aware that Woodruff had been representing Haase in the bankruptcy proceedings, contacted Woodruff to notify him that Haase was a target of a grand jury probe regarding the PCA. In April 1985, Woodruff, who was working without compensation, reached an agreement whereby Haase would waive indictment and plead guilty to one count of violating 18 U.S.C. Sec. 1014 and would receive a probationary sentence of five years in addition to a fine and an order of restitution. At no point during the course of this case did Woodruff provide Haase with an explanation of the elements of 18 U.S.C. Sec. 1014 or a discussion of any alternative courses of action such as going to trial. Woodruff believed that Haase had no defenses and that if he went to trial, conviction was a virtual certainty.

On May 3, 1985, Haase appeared before Judge Mihm to plead guilty to a one count information. Judge Mihm referred the case to the probation department, reserving judgment on whether he would approve the proposed plea agreement. See Fed.R.Crim.P. 11(e)(1)(C) & 11(e)(2). Apparently believing that Judge Mihm would accept the agreement and that any statement by Haase might jeopardize the agreement, Woodruff advised his client not to give his version of the offense to the probation department. On June 21, 1985, Judge Mihm told the parties that he could not approve the plea agreement because it would deprecate the seriousness of the offense. See Fed.R.Crim.P. 11(e)(4). Judge Mihm told Haase to explore other alternatives with his attorney. The matter was reset for July 3, 1985.

Because Woodruff believed that Haase would be convicted if he went to trial, Woodruff continued to advise Haase to plead guilty. In a letter dated June 27, 1985, he advised Haase that he had communicated with Assistant United States Attorney Stuaan and that Stuaan would be willing to go along with a plea that exposed Haase to a possibility of four years in prison.

At the proceedings that afternoon the district judge described the counts against Haase, inquired as to the petitioner's mental state, and instructed the government to read its factual basis into the record. All of this was done in a fairly detailed fashion. The questioning of Haase, however, was significantly less in-depth. Following the explanation of each aspect of the plea proceeding, the court asked Haase a series of questions which required simple affirmative or negative responses concerning what Haase understood but never resulted in any dialogue between the judge and the defendant. Notably absent from this relatively exhaustive list of questions was any inquiry into whether Haase admitted to knowingly overstating his agricultural holdings as required by Sec. 1014. At the conclusion of the plea hearing Haase was sentenced to one year in prison.

Two weeks later, with the aid of new counsel, Haase sought relief under 28 U.S.C. Sec. 2255 in an effort to vacate the plea or, at a minimum, to have his sentence reduced. Following a hearing before a magistrate, the district court reviewed the testimony from the hearing and the events surrounding the taking of the plea and concluded that: (1) his taking of the plea, while "not done in perfect fashion and probably not in the fashion that I would do it again if I had the opportunity," was adequate; (2) Haase had received constitutionally deficient representation but that Strickland v. Washington had not been violated because Haase had failed to establish the necessary prejudice; and (3) petitioner's motion for reconsideration of his sentence should be denied under Sec. 2255 and should properly be placed before the district court in a motion under Rule 35 after the disposition of this appeal. Haase appeals all three aspects of the decision.

II.

As an initial matter it must be stressed that this case arises as a collateral attack to a criminal proceeding under 28 U.S.C. Sec. 2255 rather than a direct appeal. Therefore, the petitioner must establish more than a failure to adhere to the rules governing the taking of pleas. Relief will only be granted where the error is jurisdictional, constitutional, or is a "fundamental defect which inherently results in a complete miscarriage of justice." See United States v. Frye, 738 F.2d 196, 201 n. 6 (7th Cir.1984) (citing Davis v. United States, 417 U.S. 333, 346, 94 S.Ct. 2298, 2305, 41 L.Ed.2d 109 (1974)). See also United States v. Timmreck, 441 U.S. 780, 99 S.Ct. 2085, 60 L.Ed.2d 634 (1979). While the circumstances surrounding Haase's plea of guilty are unfortunate and should have been avoided, none of Haase's objections going to the validity of the plea warrant relief under Sec. 2255.

The Guilty Plea

Haase contends that his plea should be vacated because it was inadequate under Rule 11. In support of his position petitioner stresses the failure of the district court to engage him in a meaningful dialogue and, more importantly, the failure of the district court to establish on the record that the defendant was aware of and admitted to the specific intent element of the crime for which he was charged. Were this a direct appeal there would be potentially fatal flaws in the taking of this plea. As we emphasized in Frye and again in United States v. Fountain, 777 F.2d 351 (7th Cir.1985) Rule 11 provides protection for those who voluntarily choose to waive their constitutional right to a trial by pleading guilty while ensuring an adequate record to insulate the plea from appellate and collateral attacks. To that end it is vital that the district court engage the defendant in a meaningful colloquy that elucidates and preserves in the record the defendant's state of mind, the defendant's knowledge of the rights foregone, the factual basis of the plea, and the defendant's understanding and acknowledgment of the offense to which he is pleading. See United States v. Fountain, 777 F.2d at 356.

This case, however, like United States v. Frye is not a direct appeal, and not every violation...