Mathison v. Berkebile

• Decision Date: 20 December 2013
• Docket Number: No. CIV. 12–4156.,CIV. 12–4156.
• Citation: 988 F.Supp.2d 1091
• Parties: Eugene H. MATHISON, Petitioner, v. David BERKEBILE, Warden, Respondent.
• Court: U.S. District Court — District of South Dakota

988 F.Supp.2d 1091

Eugene H. MATHISON, Petitioner,

v.David BERKEBILE, Warden, Respondent.

No. CIV. 12–4156.

United States District Court,

D. South Dakota,

Southern Division.

Dec. 20, 2013.

Sara E. Show, Shannon Falon, Ronald A. Parsons, Jr., Johnson, Heidepriem & Abdallah, LLP, Sioux Falls, SD, for Petitioner.

Jan Leslie Holmgren, U.S. Attorney's Office, Sioux Falls, SD, for Respondent.

MEMORANDUM OPINION AND ORDER

LAWRENCE L. PIERSOL, District Judge.

Eugene H. Mathison, by his counsel of record, has filed a Petition for Writ of Habeas Corpus under 28 U.S.C. § 2241 raising concerns as to whether his conviction and sentence for both money laundering and fraud is valid under the holding of United States v. Santos, 553 U.S. 507, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008). Doc. 1. The Respondent filed a Motion to Dismiss arguing that this Court has no jurisdiction over Mathison's habeas petition because it should have been filed in the District of Colorado where Mathison is incarcerated and his custodian is located. Doc. 6. This Court refused to grant Respondent's motion to stay a response on the merits reasoning that even if the Court were to find in favor of the Respondent on the issue of the correct district to bring this action, the Court could still consider it to be in the interest of justice to transfer the action pursuant to 28 U.S.C. § 1406(a) or to continue the appointment of counsel to pursue an appropriate remedy, and wanted input from the Government on the merits of the Santos claim. In its subsequent response Respondent argues that Mathison has failed to make a showing that he is entitled to raise the Santos issue on collateral review. Doc. 14. With regard to the merits of Mathison's claim of being convicted of conduct the law does not make criminal, the Respondent merely states Mathison's claim is “a point the Government does not concede.” Doc. 14, p. 17. The matter has now been fully briefed and the Court has reviewed the voluminous trial record.

PROCEDURAL BACKGROUND

Indictment and Trial

In 1996, the Government in a 25–page Second Superseding Indictment charged Eugene Mathison and three others, Robert E. Holmes, Perry Gobel, and Dean Chambers, with numerous counts of conspiracy (18 U.S.C. § 371), mail fraud (18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), and money laundering (18 U.S.C. §§ 1956(a)(1), and 1957(a)). United States v. Mathison, et al., 4:96–cr–40048 (Doc. 144). The Government alleged that Mathison was operating a Ponzi scheme and defrauded family, friends, and acquaintances of over $1 million. Included within this Ponzi scheme were four different investment groups: Northern States Investment Group, GoldStar Investment Group, Universal Investment Group, and Perob Investment Group.

Each of the money laundering counts required the Government to prove that Mathison knew that the money utilized to conduct a financial transaction represented the “proceeds” of some form of unlawful activity. In the definition portion of Instruction No. 31 the Court defined proceeds as follows:

The term “proceeds” means any property, or any interest in property, that someone acquires or retains as a result of the commission of the mail fraud or wire fraud. If someone commits a fraud and receives cash or a check and uses the cash or check to buy a cashier's check, the cash or check received is proceeds and the cashier's check is still proceeds of the crime. The government is not required to trace the property it alleges to be proceeds of mail fraud or wire fraud to a particular underlying offense. It is sufficient if the government proves that the property was the proceeds of mail fraud or wire fraud generally.

The government need not prove that all of the property involved in the transaction was the proceeds of mail fraud or wire fraud. It is sufficient if the government proves that at least part of the property represents such proceeds.

Mathison, who represented himself at trial, did not object to Instruction No. 31. In addition, none of the attorneys representing Mathison's co-defendants objected to this instruction.

A jury trial commenced on May 20, 1997, and on June 9, 1997, a jury convicted Mathison of thirty-eight counts of mail fraud, five counts of wire fraud, fifteen counts of money laundering in violation of 18 U.S.C. §§ 1956(a)(1), one count of conspiracy to commit mail fraud, wire fraud, and money laundering, and two counts of engaging in monetary transactions in property derived from unspecified unlawful activity in violation of 18 U.S.C. § 1957 (Doc. 378). By a judgment dated September 12, 1997, Mathison was sentenced to a total term of imprisonment of 246 months.¹

Post-trial

Mathison appealed from his conviction and sentence to the United States Court of Appeals for the Eighth Circuit, but did not raise any issue regarding the definition of proceeds under the money-laundering statutes. See United States v. Mathison, 157 F.3d 541 (8th Cir.1998).² Mathison's convictions and sentence were affirmed, and the Supreme Court denied Mathison's petition for a writ of certiorari on January 11, 1999.

On April 3, 2000, Mathison filed his first Motion to Vacate, Set Aside, or Correct Sentence under 28 U.S.C. § 2255. CIV. 00–4055. In his initial and initial amended Section 2255 motion, Mathison did not raise any issue regarding the definition of proceeds. District Judge Richard H. Battey denied the Section 2255 motion after finding it was barred by the one-year state of limitations. The Eighth Circuit, on March 21, 2001, denied Mathison's application for a certificate of appealability and dismissed his appeal from the denial of his Section 2255 motion.

I.WHETHER MATHISON HAS PRESENTED A CLAIM THAT CAN BE PRESENTED BY UTILIZING THE SAVINGS CLAUSE OF § 2255 AND FILING A PETITION FOR A WRIT OF HABEAS CORPUS UNDER 28 U.S.C. § 2241?

United States v. Santos

United States v. Santos, 553 U.S. 507, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008), was decided on June 2, 2008.³ The Santos case involved an illegal lottery, in which runners took commissions between 15% and 25% from the bets they gathered, and some of the rest of the money was paid as salary to collectors and to the winning gamblers. Based on the payments to runners, collectors, and winners, Santos, who ran the lottery, was convicted of violating the federal money-laundering statute, 18 U.S.C. § 1956. Another defendant pleaded guilty to conspiracy to launder money, based on his receipt of salary. The Seventh Circuit affirmed these convictions. On collateral review, the district court ruled that under intervening Circuit precedent in the Seventh Circuit which interpreted the word “proceeds” in the federal money-laundering statute as applying only to transactions involving criminal profits, not criminal receipts, there was no evidence that the transactions on which the money-laundering convictions were based involved lottery profits. The district court vacated those convictions, and the Seventh Circuit affirmed the order of the district court. In a plurality opinion, the Supreme Court in Santos affirmed the Seventh Circuit.

Justice Scalia delivered the plurality opinion in which Justice Souter and Justice Ginsburg joined, and in which Justice Thomas joined as to all but Part IV.⁴ The plurality opinion observed that since the federal money-laundering statute did not define “proceeds” ⁵ the term could mean either “receipts” or “profits.” The plurality opinion also observed that Congress has defined “proceeds” in various criminal provisions, sometimes to mean “receipts” and sometimes to mean “profits.” The plurality opinion opined that either definition made sense in the context of the money-laundering statute. Santos, 553 U.S. at 511–512, 128 S.Ct. 2020.

The plurality opinion concluded that “[b]ecause the ‘profits' definition of ‘proceeds' is always more defendant-friendly than the ‘receipts' definition, the rule of lenity dictates that it should be adopted.” Santos, 553 U.S. at 514, 128 S.Ct. 2020. The plurality opinion reasoned that if the proceeds were defined as receipts, the statute criminalizing illegal lotteries would merge with the money-laundering statute. The plurality opinion further opined that the merger problem would apply to a host of predicate crimes, “depend[ing] on the manner and timing of payment for the expenses associated with the commission of the crime.” Santos, 553 U.S. at 516, 128 S.Ct. 2020. The plurality opinion specifically noted: “And any wealth-acquiring crime with multiple participants would become money laundering when the initial recipient of the wealth gives his confederates their shares.” Id. The plurality opinion states that an interpretation of “proceeds” to mean “profits” would eliminate the merger problem.

In his concurring opinion, Justice Stevens opined that “Congress could have provided that the term ‘proceeds' shall have one meaning when referring to some specified unlawful activities and a different meaning when referring to others.” Santos, 553 U.S. at 525, 128 S.Ct. 2020. Justice Stevens observed that the legislative history of § 1956 makes it clear that Congress intended the term “proceeds” to include gross revenues from the sale of contraband and the operation of organized crime syndicates involving the sale of contraband, and opined that the rule of lenity need not apply to those types of activities. Santos, 553 U.S. at 525–526 n. 3, 128 S.Ct. 2020. Justice Stevens in his opinion also expressed concern over the merger problem and stated: “Allowing the Government to treat the mere payment of the expense of operating an illegal gambling business as a separate offense is in practical effect tantamount to double jeopardy, which is particularly unfair in this case because the penalties for money laundering are substantially more severe than those for the underlying offense of operating a gambling business.” Santos, 553 U.S. at 527, 128 S.Ct. 2020. Justice Stevens further opined: “The revenue generated by a...