U.S. v. Mangiardi

Decision Date27 November 2001
Docket NumberNo. 4:CR-95-0233.,No. 4:CV-00-2024.,4:CR-95-0233.,4:CV-00-2024.
PartiesUNITED STATES of America, v. Paul J. MANGIARDI, Defendant.
CourtU.S. District Court — Middle District of Pennsylvania

George J. Rocktashel, Asst. U.S. Atty., Williamsport, PA, for U.S.

Paul Mangiardi, Fort Dix, NJ, pro se.

MEMORANDUM

McCLURE, District Judge.

Before the court is Paul J. Mangiardi's motion under 28 U.S.C. § 2255 to vacate, set aside or correct his sentence. After a four-week jury trial, Mangiardi was convicted of 15 counts of mail fraud and one count of conspiracy. In his § 2255 motion, Mangiardi complains of court error, prosecutorial misconduct, and ineffective assistance of counsel. We will hold an evidentiary hearing relating to Mangiardi's failure to testify at trial. Otherwise, we find that each of Mangiardi's claims lacks merit, and will deny the motion.

BACKGROUND:

Mangiardi's conviction grew out of a scheme to market health benefit plans through several companies that he created, controlled, and operated. While the plans were represented to be fully-funded, self-insured trusts with backup coverage for claims exceeding premium contributions, Mangiardi failed to secure either reinsurance or stop-loss coverage, and he did not have the funds to compensate. Eventually, policy beneficiaries were left with unpaid claims.

Between April 22, 1987, and March 21, 1988, Mangiardi defrauded two elderly women, Ruth Waltman and Reba Fleming, of a total of $371,632.00. He used the proceeds to establish PARCare, a company purported to be engaged in the business of third-party administration of single-employer health plans under the Employee Retirement Income Security Act (ERISA). He issued the women certificates of investment in PARCare.

The purpose of operating PARCare under ERISA was to avoid regulation by the Pennsylvania Insurance Department. But PARCare failed to comply with ERISA for various reasons, including the failure to establish trusts and trust accounts for each employer and the commingling of funds. The commingling of funds caused the operation to be in the business of insurance, for which neither Mangiardi nor his business was licensed. Also, the business had insufficient capital to operate as an insurance company.

The Insurance Department issued a suspension order for PARCare and eventually assumed control of the company. Mangiardi sent his son to Delaware to open a business called 1st Health, and then diverted to 1st Health funds intended for PARCare. Mangiardi entered into a consent decree with the Insurance Department and was permitted to operate a company called West Branch Administrators. Eventually, however, West Branch Administrators went the way of PARCare, for essentially the same reasons.

Mangiardi's operations resulted in large-scale fraud. The plans were generally marketed to small businesses in need of inexpensive health care coverage for employees. In all, more than 5,000 of these employees were covered by the plans during the operation of PARCare, 1st Health, and West Branch Administrators.

After a grand jury returned a 16-count superseding indictment against him, Mangiardi was tried by a jury. The trial relevant to the instant motion was the second of two trials, which occurred after the first one was declared a mistrial. Being tried in the second trial as Mangiardi's codefendant was his son Eric Mangiardi, who was charged as a coconspirator. The jury returned a verdict of guilty against Paul Mangiardi as to all counts of the superseding indictment. The jury was deadlocked with respect to Eric Mangiardi, and the conspiracy charge against him was eventually dismissed. Paul Mangiardi was sentenced to a term of incarceration of 60 months on Count 1 and 151 months on each of Counts 2 through 16, to be served concurrently with each other and with Count 1. The total sentence was a period of incarceration of 151 months to be followed by a 3-year period of supervised release.

The Third Circuit affirmed the judgment of conviction and sentence. 202 F.3d 255 (3d Cir.2000). The only issue on direct appeal was whether the district court erred in admitting the evidence relating to Mangiardi's dealings with Waltman and Fleming. Mangiardi argued that the evidence's probative value was substantially outweighed by the danger of unfair prejudice, but the Court of Appeals held that the evidence was admissible. The Supreme Court denied Mangiardi's petition for a writ of certiorari, 529 U.S. 1060, 120 S.Ct. 1569, 146 L.Ed.2d 472 (2000).

DISCUSSION:

A liberal construction of Mangiardi's motion demonstrates that he brings claims of court error, prosecutorial misconduct, and ineffective assistance of counsel. While Mangiardi does not adequately separate these claims, they are indeed distinct, and for clarity's sake we will divide our analysis between claims involving the proceedings alone (and not counsel's effectiveness) and claims relating solely to ineffective assistance of counsel.

Mangiardi brings the following claims relating solely to the proceedings:

The court denied Mangiardi his full use of peremptory challenges, causing the jury to be biased;

the prosecution committed misconduct by (1) comparing Mangiardi and his companies to a shark, (2) falsely stating that Mangiardi manipulated and coerced Waltman and Fleming into giving him their money, (3) presenting perjured testimony, and (4) improperly objecting to the testimony of one of Mangiardi's attorneys;

• the evidence was insufficient to convict Mangiardi of conspiracy;

the court coerced the verdict by allowing an ailing juror to deliberate while instructing the jurors that they were free to reach a partial verdict;

• the indictment was barred by the statute of limitations; and

• the issue of Mangiardi's scheme's effect on a financial institution should have been decided beyond a reasonable doubt, in light of Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000).

Mangiardi brings the following claims for ineffective assistance of counsel:

• trial counsel failed to challenge certain jurors for cause;

• trial counsel failed to object to the "shark" reference in the prosecution's opening statement;

• trial counsel failed to object to the government's reference to Waltman and Fleming • trial counsel failed to object to the prosecution's perjured testimony;

• trial counsel failed to argue that the statute of limitations barred the indictment;

• trial counsel failed to challenge the coerced verdict;

• trial counsel failed to call certain witnesses;

• trial counsel failed to qualify certain testifying witnesses as experts;

• trial counsel refused to let Mangiardi testify despite Mangiardi's wishes to do so; and

• appellate counsel failed to raise on appeal every issue in the instant motion.

Section 2255 allows prisoners in federal custody to attack the validity of their sentences. In general, relief under § 2255 is limited to the curing of errors that were jurisdictional, rose to the level of a constitutional violation, resulted in a "complete miscarriage of justice," or led to proceedings that were "inconsistent with the rudimentary demands of fair procedure." United States v. Timmreck, 441 U.S. 780, 783-84, 99 S.Ct. 2085, 60 L.Ed.2d 634 (1979) (citations omitted); see also United States v. Addonizio, 442 U.S. 178, 185-86, 99 S.Ct. 2235, 60 L.Ed.2d 805 (1979) (citations omitted); United States v. Essig, 10 F.3d 968, 977 n. 25 (3d Cir.1993) (citations omitted).

"Generally, if a prisoner's § 2255 [motion] raises an issue of material fact, the district court must hold a hearing to determine the truth of the allegations." Essig, 10 F.3d at 976 (citations omitted). "A district court need not hold a hearing if the motion and files and records of the case show conclusively that the movant is not entitled to relief." United States v. Melendez, No. CRIM. 00-00069-01, CIV. 01-3305, 2001 WL 1251462, at *2 (E.D.Pa. September 21, 2001) (slip copy) (citing Government of the Virgin Islands v. Forte, 865 F.2d 59, 62 (3d Cir.1989)).

Before addressing the substance of Mangiardi's claims, we first must consider the issue of procedural default. As noted above, Mangiardi's direct appeal was limited to the admissibility of the evidence relating to Waltman and Fleming. The remaining claims challenging the court proceedings arguably are procedurally barred because Mangiardi could have raised them on direct appeal, but did not. See United States v. Frady, 456 U.S. 152, 167, 102 S.Ct. 1584, 71 L.Ed.2d 816 (1982). The government, though, does not argue that any of Mangiardi's claims are for this reason procedurally barred, and the court "is not required to raise the issue of procedural default sua sponte." Langston v. United States, 105 F.Supp.2d 419, 422 (E.D.Pa.2000) (adjudicating the merits of a defendant's § 2255 claim that he was incompetent to stand trial, notwithstanding that the defendant did not raise the claim at trial or on direct appeal) (citing Smith v. Horn, 120 F.3d 400, 407-409 (3d Cir. 1997)). Because each of Mangiardi's claims relating to the proceedings lacks merit, the result would be the same whether or not the claims are barred. Mangiardi is of course permitted in a § 2255 motion to raise for the first time his claims for ineffective assistance of counsel. United States v. Garth, 188 F.3d 99, 107 n. 11 (3d Cir.1999) (citing United States v. DeRewal, 10 F.3d 100, 103 (3d Cir.1993)). We now are free to examine the merits of Mangiardi's motion.

CLAIMS OF ERROR IN THE PROCEEDINGS
1. Jury Selection

Through a variety of avenues, Mangiardi argues that he was denied his Sixth Amendment right to be tried by an impartial jury and his right to due process of law under the Fifth Amendment. A generous reading of Mangiardi's motion indicates that he seeks relief for either or both of the following reasons: (1) the court's erroneous cause...

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