Harris v. U.S.
| Decision Date | 20 May 1998 |
| Docket Number | No. 97 CIV.1904(CSH).,97 CIV.1904(CSH). |
| Citation | 9 F.Supp.2d 246 |
| Parties | Roy William HARRIS, Petitioner, v. UNITED STATES of America, Respondent. |
| Court | U.S. District Court — Southern District of New York |
John B. Conway, Greenwich, CT, Jed Davis, Mitchell & Davis, Augusta, ME, for Petitioner.
Mary Jo White, United States Attorney Southern District of New York, for the United States of America; George S. Canellos, Assistant Unites States Attorney, of Counsel.
Roy William Harris petitions this Court pursuant to 28 U.S.C. § 2255 for a writ of habeas corpus setting aside his prior conviction, and under Rule 33, Fed.R.Civ.P. for a new trial. The government resists Harris's applications in their entirety.
PART I. Procedural Background
On September 9, 1992, a grand jury sitting in this district returned a 24-count superseding indictment charging Roy William Harris with conspiracy to commit wire and bank fraud in violation of 18 U.S.C. § 371, wire fraud in violation of 18 U.S.C. § 1343, bank fraud in violation of 18 U.S.C. § 1344, money laundering in violation of 18 U.S.C. § 1956(a)(2), conducting a continuing financial crimes enterprise ("CFCE") in violation of 18 U.S.C. § 225, and making a false statement on a loan application in violation of 18 U.S.C. § 1014.
Prior to trial, Harris moved to dismiss certain counts of the indictment and also to sever Count 23, which charged him with making a false statement on a loan application. This Court granted Harris's motion to sever Count 23, but denied his motion to dismiss those counts charging him with wire fraud, bank fraud, and engaging in a continuing financial crimes enterprise. See United States v. Harris, 805 F.Supp. 166 (S.D.N.Y. 1992).
A jury was empaneled on November 9, 1992. On December 14, 1992, the jury found Harris guilty on all counts tried.
On March 26, 1993, Harris filed motions for a judgment of acquittal, pursuant to Rule 29, Fed.R.Crim.P., and for a new trial, pursuant to Rule 33. This Court denied Harris's motions in their entirety. See United States v. Harris, 1993 WL 300052 (S.D.N.Y.). Prior to sentencing, Harris moved for downward departures from the United States Sentencing Guidelines. This Court denied those applications after conducting an evidentiary hearing. See United States v. Harris, 1994 WL 683429 (S.D.N.Y.).
On December 22, 1994, this Court sentenced Harris to a 188-month term of imprisonment, a 5-year term of supervised release, and a direction that Harris pay $200 million in restitution.
In an opinion dated February 28, 1996, the Second Circuit upheld Harris's conviction and sentence, except for the restitution order, which the Court of Appeals remanded to this Court for further proceedings. See United States v. Harris, 79 F.3d 223 (2d Cir.1996).
On October 7, 1996, the Supreme Court denied Harris's petition for a writ of certiorari. See Harris v. United States, ___ U.S. ___, 117 S.Ct. 142, 136 L.Ed.2d 89 (1996).
On March 18, 1997, Harris filed this petition pursuant to 28 U.S.C. § 2255 and Rule 33, for habeas corpus setting aside his conviction and for a new trial.
PART II. Timeliness of the Petition
Against this procedural background, I must consider the timeliness of Harris's petition in light of the Anti-Terrorism and Effective Death Penalty Act of 1996 ("AEDPA"), effective April 24, 1996.
Because the timeliness of a habeas corpus petition is jurisdictional in nature, I raised the question sua sponte in an opinion dated February 13, 1998, familiarity with which is assumed, and directed the parties to address it. They have done so.
I am now satisfied that Harris's petition is timely. The Court's February 13, 1998 opinion incorrectly stated at slip op. 1 that Harris did not petition the United States Supreme Court for a writ of certiorari. As the preceding Part of this opinion notes, Harris did file such a petition, which the Supreme Court denied on October 7, 1996. I therefore conclude that Harris's judgment of conviction did not become final for purposes of the one-year period of limitation contained in 28 U.S.C. § 2255 until that date. By that time the AEDPA had become effective. Harris's petition, filed on March 18, 1997, was within the one-year statutory time limit.
Accordingly the Court will consider the petition on its merits.
PART III. Factual Background
The facts of this case are set forth in detail in the cited opinions of this Court and the Court of Appeals, familiarity with which is assumed. I recount the facts in this opinion to the extent necessary to explicate the grounds for decision.
At the pertinent times petitioner Roy William Harris was the president and chief executive officer of two corporations that I will on occasion collectively refer to as the "AroChem Companies" or "the Companies." One of these, AroChem International, Inc. ("International"), operated a petroleum and petrochemical refinery complex in Puerto Rico. The other, AroChem Corporation ("AroChem"), which maintained its principal offices in Greenwich, Connecticut, provided management services to International, including supervising the inventory and trading activities of International and marketing petrochemicals and petroleum products.
Harris was also the sole shareholder and managing director of a third entity, AroChem International, Ltd. ("Limited"), which engaged in trading and financing of crude oil and petroleum products.
In January of 1990 a consortium of banks, led by Chase Manhattan Bank, N.A. ("Chase"), and including Bank Brussels Lambert ("BBL"), Swiss Bank Corporation, Banque Indosuez ("BI"), and later, Skopbank (collectively "the Banks" or "the Chase Group of Banks"), entered into a revolving credit agreement ("the RCA") with the AroChem Companies. The RCA permitted the AroChem Companies to borrow up to $245 million as needed for their business operations. Loans made under the RCA were secured by the Companies' inventory of petroleum and petroleum products and by their receivables and cash. The initial credit agreement expired in January of 1991, and was extended thereafter six times through November 30, 1991. Ultimately the AroChem Companies defaulted on their obligations under the RCA. They owed the Banks about $200 million when, on February 14, 1992, the Banks filed a petition to force the Companies into bankruptcy.
The government conducted a criminal and grand jury investigation, using the resources of the Office of the United States Attorney for this district and the FBI. The grand jury's indictment was filed on May 27, 1992.
To support its charges of conspiracy and substantive violations, the government alleged in the indictment a three-part fraudulent scheme: "conceal[ing] the true financial condition of the AroChem Companies from the Chase group of banks and the AroChem Companies' independent auditors"; misappropriations by Harris of "monies belonging to the AroChem Companies for his own personal benefit"; and "conceal[ing] from the Chase group of banks excessively speculative trading practices prohibited by the [RCA]." Indictment, ¶ 7.
According to the indictment, the first part of the fraudulent scheme consisted of creating false and fictitious contracts, invoices, receipts, wire transfers, and other documentation, including a series of "borrowing base reports" ("BBRs"), which were intended to identify the crude oil inventory and forward purchases of inventory by the AroChem Companies for refining at International's refinery in Puerto Rico.
The second part of the fraudulent scheme consisted of Harris engaging in petroleum product trading practices which repeatedly caused the AroChem Companies to hold net open positions far in excess of the one million barrel net trading position limitation imposed by the RCA, and concealing those trading practices from the Banks, with the result that Harris exposed the Companies and the Banks to excessive trading risk.
The third part of the scheme involved the diversion by Harris of assets belonging to the AroChem Companies to his personal accounts.
According to the government's theory of the case, Harris made use of Limited to perpetrate the scheme by utilizing Limited to finance oil cargoes in transit and other trading activities. Limited had accounts at Banque Paribas (Suisse) and Credit Lyonnais (Suisse) in Geneva, Switzerland (the "Swiss Banks"). The government alleged that, in order to conceal and disguise the nature, location, source and ownership of funds, Harris transferred approximately $7.5 million from the AroChem Companies' accounts at Chase through the Union Trust Company in Connecticut and into Limited's accounts at the Swiss Banks, for the purpose of concealing from the Chase Group of Banks the extent to which Harris was utilizing Limited to finance cargoes in transit and trading activities.
The Second Circuit's opinion affirming Harris's conviction described these three components of the fraudulent scheme as "The Companies' Fraudulent Practices," "Violations of Financial Covenant," and "Money Laundering," respectively. 79 F.3d at 226-28.
In addition to the government's indictment of Harris, the AroChem Companies' default on their obligations under the RCA also generated a welter of civil litigation. I need not recite all the details. It is sufficient for present purposes to say that virtually everyone involved is suing everyone else: banks are suing Harris; banks are suing Ernst & Young, the AroChem Companies' independent auditors at the relevant times; banks are suing other banks; the AroChem bankruptcy trustee is suing banks; and so forth. I may not have referred to all the litigation pairings, but it does not really matter. Most of this litigation is pending in this district, consolidated before District Judge McKenna and Magistrate Judge Ellis, although cases are also pending in other courts.
The relevance of all this civil litigation to the case at bar is that...
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