U.S. v. Lefkowitz, CR. 4-94-65(DSD), No. CIV. 00-1967(DSD).

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: Doty
• Citation: 289 F.Supp.2d 1076
• Parties: UNITED STATES of America, Plaintiff, v. Gary LEFKOWITZ, Defendant.
• Docket Number: No. CR. 4-94-65(DSD), No. CIV. 00-1967(DSD).,CR. 4-94-65(DSD), No. CIV. 00-1967(DSD).
• Decision Date: 30 October 2003

289 F.Supp.2d 1076 UNITED STATES of America, Plaintiff,
v.
Gary LEFKOWITZ, Defendant. No. CR. 4-94-65(DSD), No. CIV. 00-1967(DSD). United States District Court, D. Minnesota. October 30, 2003.

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Henry Joseph Shea, III, U.S. Attorney, Minneapolis, MN, Pro se.

Gary Lefkowitz, Federal Sandstone, MN, Pro se.

Daniel Martin Scott, Federal Public Defender, Minneapolis, MN, Pro se.

ORDER

DOTY, District Judge.

This matter is before the court upon defendant's motion for relief from a sentence in a criminal case pursuant to 28 U.S.C. § 2255. For the following reasons, defendant's motion is denied.

BACKGROUND

I. Facts

Because the factual background is fully set forth in the record, a summary of the facts is sufficient for purposes of the present motion. Defendant and his company, Citi-Equity Group ("CEG"), built or developed low to moderate income housing complexes that purportedly qualified for low income housing tax credits. Defendant and CEG offered investment opportunities in limited partnerships ("PPMs") that would allow investors to claim the tax credits.

CEG contracted with builders to develop the housing projects. In most cases, the builders agreed to obtain initial construction financing and CEG agreed to develop permanent financing upon completion of each project.

The evidence adduced at trial showed that investors' funds were taken from accounts dedicated to the projects selected by the investors and placed in a common CEG account that was controlled by defendant. Investors' money was used to pay defendant's personal expenses and CEG's operating costs. If any money remained after that, it was spent on earlier projects whose funds were by then depleted. Evidence showed that nearly $10 million of the investors' funds went directly to defendant's personal expenses over a four-year period.

Defendant and CEG also offered First Secured Mortgages ("FSMs") to investors. These loans were then made to the limited partnerships that had invested in the housing developments to finance the construction. As with the builder-financed projects, it was expected that once construction was complete, CEG would obtain long-term financing for the FSM financed projects. The FSM documents stated that the funds were to be used solely in connection with the project specified by the investor. Nonetheless, FSM funds were commingled with other CEG accounts and

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were used, most notably, to pay defendant's substantial personal expenses.

To reassure builders, limited partnership investors and FSM investors, defendant represented that permanent financing had been arranged for the projects when, in fact, it had not been finalized. Although defendant had obtained conditional offers of commitment from two banks, he misrepresented that all conditions had been met and that the financing was in place.

As defendant continued to skim from the investors' funds, it became necessary to use money from new investments to pay for older projects, despite investors' expectations that their investments were dedicated to the specific projects in which they had invested, with only a small portion retained for CEG's operating expenses.¹

Not surprisingly, defendant's scheme eventually collapsed, as CEG's liabilities came to exceed its available funds by $25 to $30 million.² Builders and investors were left holding the empty bag. Defendant's scheme defrauded and harmed builders, investors, including financial institutions, the National Development Council and the Internal Revenue Service.

II. Procedural History

On July 21, 1995, after a twenty-day trial, defendant was convicted by a jury of offenses including mail and wire fraud, income tax fraud, bankruptcy fraud, obstruction of justice and continuing financial crimes enterprise. On December 8, 1995, he was sentenced by the court to concurrent terms of imprisonment of 36, 60 and 293 months on the various counts of conviction. Defendant, who is himself a lawyer, brought multiple post-trial motions. These included several motions for a new trial, motions for judgments of acquittal in various forms, motions for dismissal of both individual counts of the indictment and alternatively, for dismissal of indictment entirely. Defendant also brought motions to disqualify the trial judge, the United States Attorney's Office for the District of Minnesota and the prosecuting assistant United States Attorney. The court denied defendant's motions.

Defendant filed notice of appeal on December 12, 1995.³ On September 9, 1997, the United States Court of Appeals for the Eighth Circuit filed its opinion reversing the judgment of the district court on counts 1 and 30 of the superseding indictment, affirming the judgment on all other counts and remanding to the district court for amendment of the judgment and a determination of the need for re-sentencing.⁴ On October 30, 1997, the district

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court issued an amended judgment and order vacating the convictions and sentences on counts 1 and 30. The court determined that resentencing was unwarranted.

On November 13, 1997, defendant filed notice of appeal from the entry of the amended judgment and order of the district court denying re-sentencing. The Eighth Circuit affirmed the judgment of the district court in an unpublished per curiam opinion on August 9, 1999.⁵ On April 20, 1998 and February 28, 2000, the United States Supreme Court denied defendant's petitions for certiorari.⁶

Defendant filed the first version of the present motion pursuant to 28 U.S.C. § 2255 on August 17, 2000. He filed a supplement to that motion on September 29, 2000. On November 7, 2000, defendant filed a third version of the motion captioned "First Amended § 2255 Motion." Also on November 7, 2000, the United States filed its answer and memorandum in opposition to defendant's § 2255 motion.⁷

On November 17, 2000, the court granted defendant's motion for leave to file a traverse to the government's answer. Defendant repeatedly sought and received extensions of time to file the traverse. Then, on May 9 and June 5, 2001, defendant filed a motion and supplemental motion for partial summary judgment on his § 2255 action.

After numerous motions and requests for extensions, defendant filed an initial traverse on August 8, 2001. Two days later, he filed a motion for new trial based on newly discovered evidence, pursuant to Fed.R.Crim.P. 33. Defendant then moved for and was granted another extension of time in which to file a traverse to the government's answer. On October 17, 2002, defendant filed a second traverse to the government's objection to his motion for relief under § 2255.⁸

DISCUSSION

I. Standards on a Motion Under 28 U.S.C. § 2255

The habeas corpus provisions set forth in 28 U.S.C. § 2255 provide prisoners a limited opportunity to bring collateral challenges to the constitutionality, legality or jurisdictional basis of federally imposed sentences. See United States v. Addonizio, 442 U.S. 178, 185, 99 S.Ct. 2235, 60 L.Ed.2d 805 (1979). The right of collateral review is an extraordinary remedy. See Bousley v. United States, 523 U.S. 614, 621, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998). Therefore, § 2255 actions are limited by the preclusive effect of decisions resulting from prior direct appellate review and by the doctrine of procedural default. On one hand, claims which have been raised and decided on direct appeal are precluded from further litigation under § 2255. See Bear Stops v. United States,

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339 F.3d 777, 780 (8th Cir.2003). On the other hand, issues that could have been, but were not, raised on direct appeal are waived and cannot be asserted for the first time in a collateral § 2255 action absent a showing of cause and actual prejudice, or a showing of actual innocence. See United States v. Frady, 456 U.S. 152, 167-68, 102 S.Ct. 1584, 71 L.Ed.2d 816 (1982); Swedzinski v. United States, 160 F.3d 498, 500 (8th Cir.1998).

Moreover, even where an error occurred, a conviction will not be overturned if that error is deemed to have been harmless. See United States v. Barnhart, 979 F.2d 647, 652 (8th Cir.1992). The harmless error standard is applied differently depending on whether or not the error touched on a constitutional right. See United States v. Drummond, 903 F.2d 1171, 1174 (8th Cir.1990). If a constitutional error was of a fundamental or structural dimension, reversal is automatic. See id. In most cases where a constitutional error is non-structural or non-fundamental, the Chapman standard is applied. See Chapman v. California, 386 U.S. 18, 22, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). Under Chapman, non-structural constitutional errors are deemed harmless if it is clear beyond a reasonable doubt that the outcome would have been the same absent the error. See Barnhart, 979 F.2d at 652-53 (citing Chapman, 386 U.S. at 24, 87 S.Ct. 824). Moreover, if a non-structural constitutional error has been addressed in a prior forum, the more deferential Brecht harmless error standard is applied and the conviction will stand unless the error had a substantial or injurious effect on the verdict.⁹ See Barrett v. Acevedo, 169 F.3d 1155, 1164 (8th Cir.1999) (citing Brecht v. Abrahamson, 507 U.S. 619, 629-31, 113 S.Ct. 1710, 1717-18, 123 L.Ed.2d 353 (1993)). Errors that are non-jurisdictional or are of less than constitutional proportion are harmless unless they "had a `substantial influence' on the outcome" or cause "`grave doubt' as to whether [they] had such an effect." See Drummond, 903 F.2d at 1174 (quoting Kotteakos v. United States, 328 U.S. 750, 776, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946)).

II. Defendant's Claims

Defendant has framed the challenges to his sentence a number of different ways in his various motions. In addition to the original § 2255 motion, the supplement to the § 2255 motion and the first amended § 2255 motion, defendant filed several motions for a new trial, a motion and supplemental motion...