U.S.A v. Sgarlat

• Decision Date: 31 March 2010
• Docket Number: Criminal No. 06-723-01 (JBS).
• Citation: 705 F.Supp.2d 347
• Parties: UNITED STATES of Americav.John P. SGARLAT, Defendant.
• Court: U.S. District Court — District of New Jersey

705 F.Supp.2d 347

UNITED STATES of Americav.John P. SGARLAT, Defendant.

Criminal No. 06-723-01 (JBS).

United States District Court D. New Jersey.

March 31, 2010.

Paul J. Fishman, United States Attorney, by Eric M. Schweiker, Assistant U.S. Attorney, Trenton, NJ.

Simon S. Kogan, Esq., Staten Island, NY, for Defendant.

OPINION

SIMANDLE, District Judge:

I. INTRODUCTION AND PROCEDURAL HISTORY

Defendant John Sgarlat, under investigation for securities fraud, wire fraud, and tax evasion, supplied a written confession to agents of the FBI on September 28, 2005 and began cooperating with the government. Mr. Sgarlat, represented by highly experienced, appointed counsel Harold Shapiro, Esquire, followed up with detailed proffer sessions with the U.S. Attorney's Office, intending to plead guilty under a negotiated plea agreement. Although Sgarlat's cooperation was ended by the government in February 2006, he still desired to cooperate against others and to enter into a guilty plea that would hopefully minimize his own criminal exposure. On September 8, 2006, pursuant to a lengthy written plea agreement dated July 13, 2006, the Court convened the Rule 11 hearing and accepted Mr. Sgarlat's guilty plea to a two-count Information. Count One charged Defendant with conspiracy to commit securities fraud in violation of 18 U.S.C. § 371 with respect to unlawful issuance of stocks in a publicly traded company, eContent, Inc., as well as misusing corporate funds for personal purposes. Count Two charged Defendant with money laundering, in violation of 18 U.S.C. § 1956(a), alleging that between February 2003 and September 2005, Defendant engaged in financial transactions involving the proceeds of specified unlawful activity, namely mail fraud, for the purpose of concealing his control of that property; specifically, Count Two of the Information alleged that Defendant solicited individuals to invest approximately $230,000 in two companies, Branded Media Corp. and Fishing World Media Corp., deposited these monies into a business account he controlled in the name of Convergiton, Inc., and spent them on himself. The 52-page transcript of that hearing reveals the thoroughness of Sgarlat's knowing and voluntary decision to plead guilty, as well as the detailed factual basis of guilt Sgarlat supplied by his unequivocal answers to the dozens of questions. (Tr. 9/8/06 at 1-52.) As part of the plea agreement, the United States also agreed not to charge Mr. Sgarlat with income tax evasion or other crimes connected with the offenses in Counts One and Two.

Over the ensuing year, as the Probation Office gathered information for the rather complex Presentence Investigation and Report, Sgarlat grew critical of Mr. Shapiro's efforts to reduce Sgarlat's sentencing exposure. Indeed Mr. Shapiro was attempting to preserve the Probation Office's recognition of Sgarlat's acceptance of responsibility, while Mr. Sgarlat was writing directly to the Probation Office, on December 26, 2006, without Mr. Shapiro's knowledge. Around the time when the draft Presentence Investigation and Report was issued on June 12, 2007, Mr. Sgarlat retained new counsel, Simon S. Kogan, Esq., of New York, who substituted into the case in place of Mr. Shapiro.

Thereafter, Mr. Kogan submitted numerous objections and documents to the Probation Department, which noted them and issued its final Presentence Investigation and Report on October 31, 2007. Sentencing was scheduled for November 20, 2007. Meanwhile, Mr. Kogan submitted the present motion to withdraw Defendant's plea of guilty on October 18, 2007, pursuant to Rule 11(d)(2)(B), Fed.R.Crim.P.

The Court thereafter convened hearings upon Defendant's motion to withdraw his plea of guilty, including hearing testimony of Mr. Sgarlat and Mr. Shapiro and arguments of counsel. For the following reasons, the Court finds Defendant Sgarlat has not met his burden, under Rule 11(d)(2), of showing a fair and just reason for the withdrawal, and this motion will be denied.

II. DEFENDANT'S ARGUMENTS

Counsel for Defendant Sgarlat presents five reasons in support of this motion to withdraw Defendant's plea of guilty, which are quoted verbatim:

1. Previous Counsel was incompetent and ineffective.

2. The defendant relied on the advice of previous Counsel to his severe detriment.

3. Factual Basis and Stipulations filed by the U.S. Attorney are time-barred by the Statute of Limitations.

4. The Defendant's Version of Offense does not constitute violation of the statutes in question.

5. Recently uncovered exculpatory evidence unlawfully suppressed by the U.S. Attorney proves the defendant is innocent beyond doubt.

Defendant's Motion [Docket Item 38] at 3.

According to new defense counsel, the previous counsel, Harold Shapiro, Esq., was incompetent and ineffective in counseling Sgarlat to enter into the negotiated guilty plea agreement to the two-count Information. New counsel, Simon Kogan, Esq., claims Mr. Shapiro failed to recognize glaring flaws in the Government's case, such as a statute of limitations bar to Count One, and in allegedly misrepresenting his abilities to defend the case, and in failing to challenge Sgarlat's allegedly involuntary confession, and in failing to obtain all evidence in the Government's investigative files recapped in 23 categories of documents (Def. Br. at 5-6). New counsel also alleges Mr. Shapiro was deficient in obtaining and reviewing allegedly exculpatory documents, including documents in Sgarlat's own possession, public records, and records of full refunds to certain victims of the crimes.

New defense counsel also alleges that the Government failed to produce exculpatory documents required by Brady before Sgarlat waived indictment and admitted his guilt to the two-count Information. Counsel takes issue with his own client's stipulations with the Government in his plea agreement.

The Government refutes each of these arguments, as discussed below.

III. DISCUSSION OF LAWA. Standard for Withdrawal of Guilty Plea

Under Rule 11(d)(2)(B), Fed.R.Crim.P., a defendant “may withdraw a plea of guilty or nolo contendere ... after the court accepts the plea, but before it imposes sentence if ... the defendant can show a fair and just reason for requesting the withdrawal.” The Third Circuit has explained this standard for withdrawal as follows:

A district court must consider three factors when evaluating a motion to withdraw a guilty plea: (1) whether the defendant asserts his innocence; (2) the strength of the defendant's reasons for withdrawing the plea; and (3) whether the government would be prejudiced by the withdrawal.

United States v. Jones, 336 F.3d 245, 252 (3d Cir.2003); see also

United States v. Brown, 250 F.3d 811, 815 (3d Cir.2001). Where the defendant claims that counsel was ineffective in permitting him to plead guilty, the Third Circuit's standard states:

A court will permit a defendant to withdraw a guilty plea based on ineffective assistance of counsel only if (1) defendant shows that his attorney's advice was under all the circumstances unreasonable under prevailing professional norms, and (2) defendant shows that he suffered sufficient prejudice from his counsel's errors.

United States v. Jones, 336 F.3d at 253-54.

The burden of demonstrating a “fair and just” reason falls on the defendant, and that burden is “substantial.” Id. at 252, citing United States v. Hyde, 520 U.S. 670, 676-77, 117 S.Ct. 1630, 137 L.Ed.2d 935 (1997) and United States v. Isaac, 141 F.3d 477, 485 (3d Cir.1998). Reasons that fail to meet a defendant's burden include “a shift in defense tactics, a change of mind, or the fear of punishment.” United States v. Jones, 336 F.3d at 252, quoting United States v. Brown, 250 F.3d at 815 (quoting United States v. Jones, 979 F.2d 317, 318 (3d Cir.1992)).

B. Defendant's Decision to Plead Guilty

John P. Sgarlat's decision to negotiate a plea agreement with the Government and to plead guilty unfolded over a year's time. In 2005, the FBI and the IRS were investigating Sgarlat for various securities frauds, money laundering, and income tax crimes. He was interviewed and gave a signed, written confession to central aspects of these crimes on September 28, 2005, and he was also interviewed on that date at length. See Govt. Mem. Opp. (Ex. H, reproducing FBI Form 302 and Defendant's signed statement.) Mr. Sgarlat was anxious, after confessing, to cooperate with the Government and continued to do so without counsel through December, 2005.

As Mr. Sgarlat claimed to be indigent and was the target of the ongoing investigation, in December 2005 the Court appointed counsel, Harold Shapiro, Esq., under the Criminal Justice Act. Mr. Shapiro, a member of this Court's CJA Panel, is a former Assistant Federal Public Defender and an active criminal defense attorney in federal and state courts for over 30 years. He testified in detail at the hearing regarding his representation of Mr. Sgarlat, the many meetings and phone conversations he held with him, and Mr. Sgarlat's desire to plead guilty. According to Mr. Shapiro's testimony, he prepared Sgarlat for a proffer session with the prosecutors that was held on January 18, 2006. Although Sgarlat took issue with some of the specifics of the government's allegations, there was never a meeting or conversation where Sgarlat professed innocence. In the January 18, 2006 proffer session in Camden, Mr. Shapiro confirmed that Sgarlat was questioned about the subjects of potential charges for securities fraud, money laundering, and income tax fraud, and Sgarlat made damaging admissions in each of these areas.

Meanwhile, Sgarlat was no longer considered a cooperator because in February 2006 the federal agents learned that Sgarlat had disclosed that he was “working with the FBI” in this investigation. From that point forward, according to AUSA Schweiker, the prosecution team could not trust Sgarlat and elected not to reveal further aspects of its investigation to him.

On February 21, 2006,...