Rubashkin v. United States

• Decision Date: 26 January 2017
• Docket Number: No. 08-CR-1324-LRR,No. 13-CV-1028-LRR,13-CV-1028-LRR,08-CR-1324-LRR
• Parties: SHOLOM RUBASHKIN, Movant, v. UNITED STATES OF AMERICA.
• Court: U.S. District Court — Northern District of Iowa

SHOLOM RUBASHKIN, Movant, v. UNITED STATES OF AMERICA.

No. 13-CV-1028-LRR

No. 08-CR-1324-LRR

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA EASTERN DIVISION

January 26, 2017

ORDER REGARDING MOTION TO VACATE, SET ASIDE OR CORRECT SENTENCE

TABLE OF CONTENTS

I. INTRODUCTION ....................................... 2

II. RELEVANT BACKGROUND ............................... 3

III. PARTIES' ARGUMENTS ................................ 10

A. The Movant's Merits Brief ........................... 10

1. Ground one ................................. 10

2. Ground three ............................... 14

B. The Government's Responsive Brief ..................... 14

1. Ground one ................................. 14

a. Disclosure of forfeiture position and reliance on newly discovered evidence ................... 15

b. Legality of forfeiture position ................. 18

c. Testimony of Paula Roby .................... 19

d. Impact of forfeiture on loss amount ............. 21

e. Cause and prejudice to overcome procedural default ................................ 22

2. Ground three ............................... 23

C. The Movant's Reply Brief ............................ 26

1. Ground one ................................. 26

2. Ground three ............................... 32

IV. MOTION FOR LEAVE TO TAKE DISCOVERY ................. 34

V. MOTION FOR AN EVIDENTIARY HEARING .................. 35

VI. ANALYSIS .......................................... 36

A. Proceedings Under 28 U.S.C. § 2255 .................... 36

B. The Movant's Grounds .............................. 42

1. Sentencing Error ............................. 42

a. Background ............................ 42

(1) Judicial proceedings .................. 42

(2) Record in relation to bankruptcy matters ..... 48

(3) Additional information ................. 83

b. Applicable legal principles .................. 100

(1) Framework relied upon after conviction ..... 100

(2) Nature and extent of due process rights when a failure to disclose occurs during trial ..... 108

c. Application ............................ 111

(1) Procedural obstacles ................. 111

(2) Cognizability ...................... 114

(3) Merits of the sentencing error claim ....... 115

(a) Parties' positions/arguments ........ 117

(b) Understanding of the court ......... 123

(i) Variables or factors ......... 123

(ii) Estimate of loss ........... 128

(c) Application of the sentencing Guidelines ................... 133

(4) Summary ......................... 136

2. Trial Error ................................ 136

VII. CERTIFICATE OF APPEALABILITY ....................... 139

VIII. CONCLUSION ...................................... 141

I. INTRODUCTION

Before the court is Sholom Rubashkin's motion to vacate, set aside or correct sentence (civil docket no. 3). Sholom Rubashkin ("the movant") filed such motion on September 30, 2013. With leave of court, the movant filed an amended motion pursuant to 28 U.S.C. § 2255 ("motion pursuant to 28 U.S.C. § 2255") on March 18, 2014 (civil docket no. 27-2).¹

II. RELEVANT BACKGROUND²

In October and November of 2008, the government commenced criminal proceedings against the movant by filing criminal complaints against him. An October 30, 2008 criminal complaint charged the movant with immigration crimes, and a November 14, 2008 criminal complaint charged the movant with financial crimes. In November and December of 2008, the government presented evidence to the grand jury, and, after considering the evidence, the grand jury returned multiple indictments that charged the movant with immigration and financial crimes. The government alleged in a November 13, 2008 superseding indictment (criminal docket no. 80) that the movant committed immigration crimes, and the government alleged in a November 20, 2008 second superseding indictment (criminal docket no. 94) that the movant committed bank fraud when he diverted customer payments on accounts receivable and caused Agriprocessors' books to reflect an inflated amount for accounts receivable which in turn he offered as collateral for bank loans.³ On December 11, 2008, the grand jury returned a third superseding indictment (criminal docket no. 150), which, among other things, sought the criminal forfeiture of property connected to the immigration crimes under 8 U.S.C. § 1324(b), 18 U.S.C. § 982(a)(6)(A) and 28 U.S.C. § 2461(c). The government's criminal forfeiture allegation provided:

Upon conviction . . ., [Agriprocessors, the movant and other defendants] shall forfeit to the United States the proceeds and gross proceeds of such violations, and any property traceable to such proceeds, and any property, real or personal, that was used to facilitate, or was intended to facilitate, the commission of the offenses of which the defendants are convicted, including but not limited to the following:

1. the corporate name "Agriprocessors, Inc.";

2. any and all trademarks of Agriprocessors, Inc., including but not limited to: Iowa Best Beef (registration number 2679189); Shor Habor (registration number 2036953); Aaron's Best (registration number 2029970); and Rubashkin (registration number 2031920); and

3. any and all corporate stock of Agriprocessors, Inc.

Third Superseding Indictment (criminal docket no. 150) at 14-15.

On January 15, 2009, the grand jury returned a fourth superseding indictment (criminal docket no. 177), which, among other things, greatly expanded the number of counts alleging that the movant committed financial crimes. On March 31, 2009, the grand jury returned a fifth superseding indictment (criminal docket no. 413). On May 14, 2009, the grand jury returned a sixth superseding indictment (criminal docket no. 464), which, among other things, greatly expanded the number of counts alleging that the movant committed immigration crimes.

On July 16, 2009, a grand jury returned a 163-count seventh superseding indictment (criminal docket no. 544) against the movant. Count 1 charged the movant with conspiracy to harbor undocumented aliens for profit, in violation of 8 U.S.C. §§ 1324(a)(1)(A)(v)(I) and 1324(a)(1)(B)(i). Counts 2 through 70 charged the movant with harboring and aiding and abetting the harboring of undocumented aliens for profit, in violation of 8 U.S.C. §§ 1324(a)(1)(A)(iii), 1324(a)(1)(A)(iv), 1324(a)(1)(A)(v)(II) and 1324(a)(1)(B)(i). Count 71 charged the movant with conspiracy to commit document fraud, in violation of 18 U.S.C. § 371. Count 72 charged the movant with aiding and abetting document fraud, in violation of 18 U.S.C. §§ 1546(a) and 2. Counts 73 through 86 charged the movant with bank fraud, in violation of 18 U.S.C. § 1344. Counts 87 through 110 charged the movant with the making of false statements and reports to a bank, in violation of 18 U.S.C. § 1014. Counts 111 through 124 charged the movant with wire fraud, in violation of 18 U.S.C. § 1343. Counts 125 through 133 charged the movant with mail fraud, in violation of 18 U.S.C. § 1341. Counts 134 through 143 charged the movant with money laundering and aiding and abetting money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(a)(1)(B)(i) and 2. Counts 144 through 163 charged the movant with willful violation of an order of the secretary of agriculture and aiding and abetting a willful violation of an order of the secretary of agriculture, in violation of 7 U.S.C. § 195 and 18 U.S.C. § 2.

Pursuant to the movant's motion (criminal docket no. 497), the court ordered separate trials on counts 1 through 72 ("Immigration Counts") and counts 73 through 143 ("Financial Counts").⁴ Id. Also upon the movant's motion for a change in venue (criminal docket no. 624), the court ordered the trial to take place in South Dakota. See Sept. 1, 2009 Order (criminal docket no. 656). From October 13, 2009 to November 12, 2009, a jury trial on the Financial Counts, which the court renumbered as counts 1 through 91,⁵ took place. See Minute Entries (criminal docket nos. 700-01, 704, 708-11, 715-18, 725, 727-32 & 734).

[The movant's] trial on the [Financial Counts] focused on Agriprocessors' fraudulent inflation of collateral. The government also introduced some evidence related to immigration violations which was relevant to the fraud charges. The [seventh superseding] indictment alleged that Agriprocessors had fraudulently told [First Bank Business Capital, Inc. ("FBBC"),⁶ a wholly-owned subsidiary of St. Louis based First Bank,] it was not "in violation of any law, statute, [or] regulation . . . which . . . would in any respect materially and adversely affect the collateral . . . or [Agriprocessors'] property, business, operations, or condition." The immigration evidence both provided an alternative theory of bank fraud and formed the basis for fifteen counts of false statements to a bank. 18 U.S.C. § 1014.

Rubashkin, 655 F.3d at 855 (fourth through ninth alteration in original). On November 12, 2009, the jury returned guilty verdicts on renumbered counts 1 through 71, 73 through 80, 84 through 89 and 91—fourteen counts of bank fraud, twenty-four counts of making false statements and reports to a bank, fourteen counts of wire fraud, nine counts of mail fraud, ten counts of money laundering and fifteen counts of violating an order of the Secretary of Agriculture to timely pay suppliers of livestock. See Verdict Forms (criminal docket no. 736). The jury returned not guilty verdicts on renumbered counts 72, 81, 82, 83 and 90—five counts of violating an order of the Secretary of Agriculture to timely pay suppliers of livestock. Id. On November 19, 2009, the court granted the government's motion to dismiss without prejudice the Immigration Counts and related criminal forfeiture provisions. See Nov. 19, 2009 Order (criminal docket no. 746). The allegations underlying the Immigration Counts dealt with the May 12, 2008 worksite enforcement action by Immigration and Customs Enforcement ("ICE").

On February 22, 2010, the probation office filed a draft presentence report. See Draft Presentence Report ...