Souels v. United States

• Decision Date: 24 August 2017
• Docket Number: Civil No. 1:15-cv-07563(JBS)
• Parties: SEAN A. SOUELS, Petitioner, v. UNITED STATES OF AMERICA, Respondent.
• Court: U.S. District Court — District of New Jersey

SEAN A. SOUELS, Petitioner, v. UNITED STATES OF AMERICA, Respondent.

Civil No. 1:15-cv-07563(JBS)

UNITED STATES DISTRICT FOR THE DISTRICT OF NEW JERSEY

August 24, 2017

[Relates to Cr. No. 10-510-05 (JBS)

MEMORANDUM OPINION

SIMANDLE, District Judge:

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Petitioner Sean Souels entered a plea of guilty on September 4, 2014, to conspiracy to commit wire fraud contrary to 18 U.S.C. § 1343, in violation of 18 U.S.C. § 1349. United States v. Souels, Cr. No. 10-510-05 (JBS). Souels admitted he conspired with others as part of a mortgage fraud scheme involving properties in the Wildwood, New Jersey area. Upon his violation of conditions of release, his bail was revoked on March 24, 2015, and he has been in custody since March 27, 2015. [Docket Item 259.]

He was sentenced on May 14, 2015, to 46 months' imprisonment following a hearing in which the Court determined his Total Offense Conduct (TOC) level was 23 and his Criminal History Category (CHC) was III, yielding an advisory Sentencing Guidelines range of 46 to 57 months.

In this timely petition under 28 U.S.C. § 2255, Mr. Souels principally asserts that his sentencing level was erroneous due to a loss calculation that incorrectly determined the amount of loss under U.S.S.G. § 2B1.1(b)(1).

His amended petition, filed November 2, 2015 [Docket Item 3], seeks to set aside his sentence pursuant to § 2255 based on three grounds, which may be paraphrased as follows:

1. The sentence violates the Mandatory Victim Restitution Act of 1996 by using a short sale price rather than a fair market value to determine the amount of the victim's loss.

2. The sentence is illegal because the PSR incorrectly implied the property was foreclosed when the victim financial institution actually sold it at a short sale that canceled the original loans, rendering the loss zero.

3. Defense counsel provided ineffective assistance in acquiescing to the loss amount of $253,256.23 when in fact there was no loss to the victim.

In pleading guilty to wire fraud conspiracy, without a written plea agreement, on the eve of trial, Souels admitted, among other things, that he conspired in 2007 with Darryl Henry and Jerry Smith to devise a scheme and artifice to defraud a mortgage lender to grant purchase money mortgage loans to a straw purchaser through means of a false mortgage application and HUD-1 settlement statement in connection with the sham purchase of Unit 203 at 401 East Stockton Road, Wildwood, New Jersey. (Tr. Sept. 4, 2014 at 23-37.)

In his detailed factual colloquy, Souels testified that he was guilty as charged in Count One of the Second Superseding Indictment. (Id. at 23:18-24.) He admitted he was the pastor of the ReBirth International Church in Union County, New Jersey in 2007, and that he recruited a young naive female member of his congregation, K.P., to be the nominal purchaser of this property at the New Jersey shore under a scheme devised by co-conspirator Jerry Smith, who was involved in the real estate business. (Id. at 23:25-25:4.) Souels provided false information to a mortgage broker that K.P. was employed by his church as "president of operations," when in fact K.P. was not a church employee. (Id. at 25:3-10; 26:11-24.) Souels admitted he knew K.P. could not afford a mortgage for $413,000, or even for a lesser amount such as $299,000. (Id. at 27:5-19.)

Souels admitted that he was aware K.P. brought no money to the closing, and he does not dispute that the HUD-1 settlement statement falsely indicated that she brought approximately $136,900 to the closing to serve as a down payment. (Id. 28:8-29:19.)¹ He admitted that he received approximately $30,000 of the illegal excess proceeds from the sale which funds were deposited by a co-conspirator into K.P.'s account, to which Mr. Souels had access and expended funds for his own benefit, including mortgage expenses for his own home and car payments for his own car and for travel. (Id. at 29:20-34:14.) Through these false and fraudulent documents, he caused Gateway Funding to release thepurchase mortgage funds. (Id. 36:3-10). Petitioner does not dispute that the false mortgage loan application and false HUD-1 settlement statement caused the lender to extend two mortgage loans in the total amount of $478,256.26 for K.P.'s straw purchase of Unit 203.

At sentencing, consistent with the Presentence Report for this property at Unit 203, the loss figure was calculated to be $253,256.26. (PSR ¶39; Tr. May 14, 2015 at 23:7-8.) This loss figure was computed as follows. Gateway Funding extended a total of $478,256.26 in two separate mortgage loans ($411,901.19 plus $66,355.07) for K.P.'s purchase of Unit 203. No mortgage payments were made by anyone. West Coast Servicing had acquired the loan from Gateway in a pool of loans in December of 2007. (Statement of Steve J. Kraemer, President of West Coast Servicing, Inc., in FBI 302 by Special Agent Stefanowicz (Nov. 20, 2008), attached to Gov't Br. at Ex. D (hereinafter "Kraemer Report")). After taking possession of the property on April 10, 2008, West Coast Servicing resold the property for $225,000.00, resulting in a loss of $253,256.26. (Final PSR ¶95);² Kraemer Statement, supra, at Gov't Br., Ex. D. The loss of $253,256.26 resulted in a 12-level enhancement under U.S.S.G. § 2B1.1(b)(1)(G), to which there was no objection at sentencing.³

Petitioner now alleges that this loss calculation was erroneous and that his counsel was constitutionally ineffective for failing to object. The United States has timely filed its Answer.⁴

The United States argues that the first two grounds, alleging a miscalculation of loss in the PSR, should be dismissed for lack of jurisdiction under § 2255, and that the third ground, alleging ineffective assistance of counsel with regard to the loss amount determination, should be denied for lack of merit. These arguments are next considered.

II. DISCUSSION OF LAW

A. Grounds One and Two: Subject Matter Jurisdiction

The United States seeks dismissal of Grounds One and Two for lack of jurisdiction under § 2255. Petitioner seeks to use the vehicle of a § 2255 motion to seek review of an alleged methodological error in computing loss amount under the mandatory restitution provision of the Antiterrorism and Effective Death Penalty Act of 1996, 18 U.S.C. § 3663A and under the U.S. Sentencing Guidelines, § 2B1.1(a)(2). The United States correctly points out that these are claims of a non-constitutional dimension.

Section 2255 provides in pertinent part:

A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence... may move the court... to vacate, set aside or correct the sentence....

28 U.S.C. § 2255. The United States asserts most courts of appeals have held, barring extraordinary circumstances, that claims of non-constitutional error in the application of the Sentencing Guidelines cannot be raised in a § 2255 motion, Gov't Opp. at 4-5 (citing Knight v. United States, 37 F.3d 769, 773 (1st Cir. 1994); Graziano v. United States, 83 F.3d 587, 589-90 (2d Cir. 1996) (per curiam); United States v. Pregent, 190 F.3d 279, 283-84 (4th Cir. 1999); United States v. Payne, 99 F.3d 1273, 1281-82 (5th Cir. 1996); Grant v. United States, 72 F.3d 503, 505-06 (6th Cir. 1996); Buggs v. United States, 153 F.3d 439, 443 (7th Cir. 1990); Auman v. United States, 67 F.3d 157, 160-61 (8th Cir. 1995); United States v. Schlesinger, 49 F.3d 483, 485 (9th Cir. 1994); Burke v. United States, 152 F.3d 1329, 1331-32 (11th Cir. 1998). But cf. United States v. Talk, 158 F.3d 1064, 1069 (10th Cir. 1998) (assuming without deciding that claim of nine-level Guideline error that would reduce 108-month sentence by more than 50 months is cognizable)). The Third Circuit does not appear to have directly addressed this jurisdictional issue.

The Government thus argues that a motion under § 2255 is a collateral attack upon the legality of a sentence, citing In re Dorsainvil, 119 F.3d 245, 249 (3d Cir. 1997), for which the grounds are limited, United States v. Addonizio, 442 U.S. 178, 184 (1979). The § 2255 petition is to be granted only if the sentence results "in a fundamental defect which inherently results in acomplete miscarriage of justice" or "an omission inconsistent with the rudimentary demands of fair procedure." Hill v. United States, 368 U.S. 424, 428 (1962); United States v. Cleary, 46 F.3d 307, 311 (3d Cir. 1995).

In other words, the ordinary means for correcting sentencing errors in the application of the U.S. Sentencing Guidelines or the determination of obligations to victims under the restitution provisions of 18 U.S.C. §§ 3663A, et seq., is by direct appeal, while sentencing errors of a constitutional dimension which are alleged to be the basis for release from custody may be pursued under the § 2255 process.

The Court agrees in part with the Government's jurisdictional argument. Because § 2255 textually requires that the petitioner be seeking release from custody, it should be apparent that § 2255 does not provide a basis for reviewing the amount of restitution to be paid to a victim under the Victim and Witness Protection Act. Recalculating and reducing (or even eliminating) the amount of restitution owed to a victim by a person in custody does not result in the petitioner's release from custody. Absent extraordinary circumstances (such as perhaps confinement for contempt of court for willful refusal to pay restitution), the reduction or elimination of a restitution obligation would not negate the underlying conviction nor otherwise hasten release from custody. Thus, Ground One seeking review of the amount of restitution is not cognizable under § 2255, and it will be dismissed for lack of jurisdiction.

Ground Two, however, may lie within § 2255's...