U.S. v. O'Neil

• Decision Date: 18 June 1997
• Docket Number: No. 1531,D,1531
• Parties: UNITED STATES of America, Appellee, v. Dennis O'NEIL; Ronald Bauer; Richard Procknal; Richard O'Neil; Deborah Sills; Kenneth Hughes; Maria Bennett; Gregory Hinaman; Thomas R. Smith; John Andrews; Martin Victor; Leo Gastle; Grand National Products; Grand American Marketing, Inc.; Universal Promotions; Northtown Universal Products, Inc., Defendants, Thomas Saia, Defendant-Appellant. ocket 96-1623.
• Court: U.S. Court of Appeals — Second Circuit

Page 65

118 F.3d 65

UNITED STATES of America, Appellee, v. Dennis O'NEIL; Ronald Bauer; Richard Procknal; Richard O'Neil; Deborah Sills; Kenneth Hughes; Maria Bennett Gregory Hinaman; Thomas R. Smith; John Andrews; Martin Victor; Leo Gastle; Grand National Products; Grand American Marketing, Inc.; Universal Promotions; Northtown Universal Products, Inc., Defendants Thomas Saia, Defendant-Appellant.

No. 1531, Docket 96-1623.

United States Court of Appeals Second Circuit.

Argued May 1, 1997.

Decided June 18, 1997.

Marc S. Gromis, Assistant United States Attorney, Buffalo, NY (Patrick H. NeMoyer, United States Attorney, Western District of New York, Buffalo, NY, of counsel), for Appellee.

Mark J. Mahoney, Harrington & Mahoney, Buffalo, NY, for Defendant-Appellant.

Before: MINER and CALABRESI, Circuit Judges, and SHADUR, District Judge. ^*

MINER, Circuit Judge:

Defendant-appellant Thomas Saia appeals from a judgment entered in the United States District Court for the Western District of New York (Arcara, J.) convicting him, following a jury trial, on two counts of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371, and three counts of wire fraud, in violation of 18 U.S.C. § 1343, and sentencing him to a 110-month term of imprisonment, a 3-year term of supervised release, restitution in the amount of $270,000, and a $250 special assessment.

Following Saia's conviction, trial counsel withdrew and Saia obtained substitute counsel. Saia's substitute counsel moved for a new trial pursuant to Fed.R.Crim.P. 33, arguing, inter alia, that Saia received ineffective assistance of trial counsel because of an actual conflict of interest arising from a fee dispute that resulted in trial counsel filing a civil action against Saia days before trial. On a motion for a new trial, the district court determined that there was no actual conflict of interest and that Saia received effective representation during his trial.

For the reasons that follow, we affirm the judgment of the district court.

BACKGROUND

Defendant-appellant Thomas Saia was one of 27 individuals indicted by the government in connection with a conspiracy to commit wire fraud through the operation of four telemarketing operations--Grand National Products ("GNP"), Grand American Marketing, Inc. ("GAM"), Universal Promotions ("UP"), and Northtown Universal Products. In the prosecution giving rise to this appeal, Saia was named with twelve other individuals in a 110-count indictment.

In pursuit of the conspiracy, employees of these companies, using a written sales script, telephoned individuals in Canada and the United States and falsely told them they were one of 14 winners in a large awards promotion. Each person was told that he or she had won either an automobile valued at Once an individual sent the company money, he or she often was contacted by a more experienced telemarketer, called a "reloader." The reloaders attempted to obtain more money from the individuals by telling them that they had won more valuable prizes and that additional taxes and expenses must be paid before shipment could be made.

$35,000 or a large screen television worth $5000. However, the people were told that they must send some specified amount--usually between $1500 and $5000--to the company in order to receive the award. The salesperson explained either that the money was required to pay taxes, duties and other expenses, or to purchase a product.

According to the evidence adduced at trial, Saia partially owned three of the companies and managed the fourth. His responsibilities included training the sales staff, providing them with leads, and occasionally sending out small prizes instead of the promised items to people contacted by the sales staff. Trial testimony further established that Saia was aware of the misrepresentations made by the sales staff and that he complimented these staff members on their selling techniques. Testimony also established that some customers received a low-cost cleaning product, some received a television valued at less than $400, but no one received either a large screen television or an automobile.

Upon his indictment in September of 1994, Saia retained attorney Leonard Berkowitz upon payment of a fee of $2500, which was paid by Saia's family. At some point thereafter, Berkowitz realized that the retainer fee was insufficient to cover the cost of Saia's defense and, sometime in January of 1995, requested an additional $7500. Saia told Berkowitz that he could not afford to pay the additional money at that time, but said he would pay it at a later time.

On January 17, 1995, Berkowitz moved before the magistrate judge to withdraw from Saia's defense, citing strategic disagreements with Saia, Saia's failure to pay the full fee, and Saia's failure to keep appointments. The government opposed the motion because the case was ready for trial and it believed it would be prejudiced by any delay resulting from Saia's attempt to find another attorney. Saia indicated that he could obtain new counsel by February 8, 1995. The magistrate judge reserved decision on the motion and ordered Saia to appear on February 3.

When Saia appeared on February 3, he came without new counsel and instead asked for assigned counsel pursuant to the Criminal Justice Act ("CJA"), 18 U.S.C. § 3006A. Upon questioning, the magistrate judge learned that Saia had invested $15,000 in a new telemarketing company only three months earlier, expected to earn between $500 and $800 a week from this company, and had traveled to Atlanta two days earlier at his own expense. Although Saia claimed that he had borrowed the vast majority of the $15,000 investment, the magistrate judge denied Saia's request. When the magistrate said that Saia had access to sufficient funds to retain counsel, Saia stated: "I didn't say that I couldn't afford counsel. I couldn't afford the counsel that I had been talking to." (J.A. 23.) Saia did not appeal the magistrate judge's decision, nor did he request the appointment of CJA counsel by the district court.

On February 14, Saia appeared before the district court with Kenneth Farrell, Berkowitz's associate, who previously had filed motions in the case and was now lead counsel in Saia's defense. ¹ At that appearance, Farrell expressed Saia's desire that Farrell continue as counsel and that Saia was satisfied with his representation. However, Farrell renewed the law firm's motion to withdraw from the case. The district court denied Farrell's motion to withdraw.

On April 13, 1995, Farrell sent Saia a letter informing him that the firm would "not incur any additional expenses for witness fees or a process server to serve any subpoena" because Saia had not paid the balance of the agreed fee. (J.A. 35.) Farrell did indicate, however, that he would attempt to contact each person listed on the witness list provided by Saia, but cautioned Saia that "there is no assurance of the appearance of On June 6, 1995, six days before the scheduled trial date, Berkowitz filed a civil suit against Saia for legal fees incurred during the pre-trial phase of the litigation. Saia did not file an answer, and default judgment was entered in the amount of $5,838.07 on July 6, 1995. A second suit was filed in July of 1995, this time relating to fees and expenses incurred for trial preparation and trial. That suit resulted in a default judgment for $10,743.77. Berkowitz explained that the civil actions were intended to protect the firm's interest.

any witness named in the Witness List." (Id.) Farrell in fact did attempt to contact each person and determined that all but one of the people would be harmful to the defense--a conclusion Saia shared.

Following a jury trial, at which 27 witnesses testified for the government, Saia was convicted on each of the five counts of the indictment in which he was named. Following Saia's conviction, attorney Michael Cleary contacted Farrell at the request of Saia's family to discuss filing a motion for Saia's release pending sentencing. Cleary testified at the hearing on Saia's new trial motion that Farrell had informed him that the firm would not file the motion because it had not been paid. Saia's brother-in-law, John Duncan, also testified that he was told that the firm would not file the motion unless it was paid additional compensation. After Duncan paid the firm $1000, Farrell filed the motion on August 10, 1995. The motion was denied by the district court on August 28, 1995.

On September 6, 1995, Farrell again moved the district court to withdraw as counsel. Also around that time, Farrell filed objections to the sentencing recommendations set forth in the presentence report. The district court later overruled those objections. On that same date, present counsel filed a notice of substitution of counsel. The government objected to the substitution, alleging a conflict of interest because a partner of present counsel's firm represented a co-defendant who earlier had pled guilty. On October 25 and 27, the district court held a hearing on the conflict issue and, on November 3, granted Farrell's motion to withdraw and permitted the substitution of counsel.

On December 13, 1995, Saia filed a motion for a new trial based upon his alleged conflict of interest with Farrell. An evidentiary hearing on the issue began on March 27 and ended on April 2, 1996. Saia, Berkowitz, Farrell, Cleary, and Duncan all testified at the hearing. On August 15, 1996, the district court denied Saia's motion, finding that there was no actual conflict of interest and that Saia had been afforded effective assistance during the trial.

Saia was sentenced on September 20, 1996. Based upon the evidence adduced at trial and the recommendations of the Probation Department, the district court found that Saia's adjusted offense level was 28 and his criminal history category was III, resulting in a guideline range of 97-121 months. In calculating Saia's adjusted...