United States v. Daugerdas

• Citation: 521 F.Supp.3d 320
• Decision Date: 22 February 2021
• Docket Number: 09cr581
• Parties: UNITED STATES of America, v. Paul M. DAUGERDAS, Defendant.
• Court: U.S. District Court — Southern District of New York

521 F.Supp.3d 320

UNITED STATES of America,

v.Paul M. DAUGERDAS, Defendant.

09cr581

United States District Court, S.D. New York.

Signed February 22, 2021

Nanette Louise Davis, Jason Peter Hernandez, Stanley John Okula, Jr., Andrew Caldwell Adams, Kiersten Ann Fletcher, Niketh Varadaraj Velamoor, Rachel Peter Kovner, United States Attorney Office, Sdny, New York, NY, for United States of America.

MEMORANDUM & ORDER

WILLIAM H. PAULEY III, Senior United States District Judge:

Pro se Defendant Paul M. Daugerdas petitions this Court for a writ of audita querela vacating the forfeiture and restitution orders entered following his convictions for conspiracy to defraud the United States and other crimes related to a fraudulent tax shelter scheme. Specifically, Daugerdas contends that his forfeiture and restitution obligations are unenforceable in view of recent Supreme Court precedent that applies retroactively to this criminal action. (See Pet. for Writ of Audita Querela, ECF No. 933 ("Petition"), at 1.) For the following reasons, the Petition is denied.

BACKGROUND

On July 1, 2013, the Government filed a sixth Superseding Indictment charging Daugerdas with running a fraudulent tax shelter scheme from approximately 1994 until 2004. (See generally ECF No. 644 ("S6 Indictment").) The S6 Indictment contained forfeiture allegations pursuant to 18 U.S.C. § 1981(a)(1)(C)¹ and 18 U.S.C. § 1982(a)(2)(A), seeking forfeiture of any proceeds obtained from the conspiracy and mail fraud offenses. (S6 Indictment ¶¶ 108–108(a).) On October 31, 2013, following an eight-week trial, a jury in this District convicted Daugerdas of seven counts in the S6 Indictment, including: one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371 ; four counts of client tax evasion, in violation of 26 U.S.C. § 7201 ; one count of obstructing the Internal Revenue Service ("IRS"), in violation of 26 U.S.C. § 7212(a) ; and one count of mail fraud, in violation of 18 U.S.C. § 1341. (ECF No. 775, at 7807–14; see ECF No. 838 ("Judgment"), at 1–2.) On June 24, 2014, this Court sentenced Daugerdas principally to 180 months of imprisonment and imposed $371,006,397 in restitution. (Judgment, at 3, 6–7). Additionally, this Court entered a Preliminary Order of Forfeiture ("Forfeiture Order") against Daugerdas in the amount of $164,737,500.² (ECF No. 836.)

Daugerdas appealed his conviction and sentence, including the Forfeiture Order. (ECF No. 841.) With respect to the Forfeiture Order, Daugerdas argued that the Government failed to establish the requisite "nexus" between his criminal conduct and certain property sought within the Order.

United States v. Daugerdas, 837 F.3d 212, 231 (2d Cir. 2016). The Second Circuit rejected that argument—along with Daugerdas's remaining arguments—and affirmed his conviction and sentence on September 21, 2016. (ECF No. 896.) Daugerdas then petitioned the Supreme Court for a writ of certiorari, which was denied on October 2, 2017. United States v. Daugerdas, 837 F.3d 212 (2d Cir. 2016), cert. denied, ––– U.S. ––––, 138 S. Ct. 62, 199 L.Ed.2d 20 (2017). This Petition followed, as did a separate habeas proceeding pursuant to 28 U.S.C. § 2255.³

Daugerdas presents three grounds for audita querela relief. First, he claims that the Forfeiture Order is unlawful because it imposes joint and several liability in violation of Honeycutt v. United States, ––– U.S. ––––, 137 S. Ct. 1626, 198 L.Ed.2d 73 (2017). Second, Daugerdas contends that the conspiracy and mail fraud offenses cannot serve as predicates for the forfeiture obligation because neither offense was adequately charged or proven by the Government. Finally—and relatedly—Daugerdas argues that "the charges alleged in the indictment which [gave] rise to all of the restitution and virtually all of the forfeiture, were the subject of an acquittal by the jury," and therefore the continued imposition of his forfeiture and restitution obligations violates Nelson v. Colorado, ––– U.S. ––––, 137 S. Ct. 1249, 197 L.Ed.2d 611 (2017). (Suppl. Reply in Supp. Pet. for Writ of Audita Querela, ECF No. 977, at 4; see Petition, at 14.)

DISCUSSION

The writ of audita querela is an "ancient" common law writ, Triestman v. United States, 124 F.3d 361, 380 n.24 (2d Cir. 1997), "of a most remedial nature, and invented lest in any case there should be an oppressive defect of justice, where a party who has a good [defense] is too late in making it in the ordinary forms of law," Humphreys v. Leggett, 50 U.S. 297, 313, 9 How. 297, 13 L.Ed. 145 (1850). While Fed. R. Civ. P. 60(e) expressly abolished audita querela in civil cases, the writ "remains available in limited circumstances with respect to criminal convictions," United States v. Richter, 510 F.3d 103, 104 (2d Cir. 2007) (per curiam). However, "few courts ever have agreed as to what circumstances would justify [that] relief." Klapprott v. United States, 335 U.S. 601, 614, 69 S.Ct. 384, 93 L.Ed. 266 (1949) (Black, J.) (plurality opinion).

In the Second Circuit, the writ of audita querela "is probably available where there is a legal, as contrasted with an equitable, objection to a conviction that has arisen subsequent to the conviction and that is not redressable pursuant to another post-conviction remedy." United States v. LaPlante, 57 F.3d 252, 253 (2d Cir. 1995) ; see also United States v. Valdez-Pacheco, 237 F.3d 1077, 1079 (9th Cir. 2001) (per curiam) (noting that the writ of audita querela "survive[s] only to the extent that [it] fill[s] ‘gaps’ in the current systems of postconviction relief"). Indeed, the writ "might be deemed available if [its] existence [was] necessary to avoid serious questions as to the constitutional validity of both § 2255 and § 2244." Triestman, 124 F.3d at 380 n.24. "In other words, if the absence of any avenue of collateral attack would raise serious constitutional questions about the laws limiting those avenues, then a writ of audita querela would lie." Richter, 510 F.3d at 104.

In this Circuit, a defendant cannot challenge noncustodial components of his sentence in a § 2255 habeas petition. Kaminski v. United States, 339 F.3d 84, 88–89 (2d Cir. 2003) ; see also, e.g., Lasher v. United States, 2018 WL 3979596, at *9 (S.D.N.Y. Aug. 20, 2018) ; Pinhasov v. United States, 2018 WL 550611, at *3 (S.D.N.Y. Jan. 22, 2018). Accordingly, Daugerdas avers that the writ of audita querela is the only way to obtain relief from his allegedly unlawful forfeiture and restitution obligations. (See Petition, at 2.)

I. Daugerdas's Honeycutt Claim

To begin, Daugerdas claims that the Forfeiture Order violates the Supreme Court's decision in Honeycutt v. United States, ––– U.S. ––––, 137 S. Ct. 1626, 198 L.Ed.2d 73 (2017). There, the Supreme Court held that under 21 U.S.C. § 853(a)(1) —the criminal forfeiture statute governing certain drug offenses—a defendant may not "be held jointly and severally liable for property that his co-conspirator derived from the crime but that the defendant himself did not acquire." Honeycutt, 137 S. Ct. at 1630. Here, Daugerdas contends that the Forfeiture Order does precisely what Honeycutt prohibits—it imposes joint and several forfeiture liability on Daugerdas for criminal proceeds that he did not personally obtain. And although Honeycutt "post-dates [his] trial and direct appeal" to the Second Circuit, Daugerdas insists that the decision is a "substantive change in decisional law" that is "fully retroactive on collateral review," (Petition, at 4 (citing Schriro v. Summerlin, 542 U.S. 348, 351, 124 S.Ct. 2519, 159 L.Ed.2d 442 (2004) (for the proposition that "substantive decisions that narrow the scope of a criminal statute, by interpreting its terms, apply retroactively on collateral review")).) Thus, Daugerdas claims this Court must vacate the Forfeiture Order.⁴

In response to Daugerdas's Honeycutt argument, the Government makes two concessions. First, the Government acknowledges that while the Forfeiture Order does not use the phrase "joint and several": (1) the Order's $164,737,500 money judgment represents "the aggregate amount of unlawful proceeds—in the form of tax shelter fees—paid to Daugerdas and his conspirators," and (2) Daugerdas's portion of that aggregate sum was approximately $95 million. (Government Opp'n, at 1–2.) Second, the Government agrees that " Honeycutt announced a substantive rule that has retroactive effect" on collateral review.⁵ (Government Opp'n, at 2.) Despite these concessions, the Government maintains that Daugerdas procedurally defaulted his Honeycutt claim by failing to challenge the joint and several nature of the Forfeiture Order on direct appeal. (Government Opp'n, at 2–4.)

A. Procedural Default

The writ of audita querela is unavailable "if the petitioner could have sought earlier relief through another mechanism such as a direct appeal." Cummings v. United States, 2014 WL 3388559, at *2 (S.D.N.Y. July 11, 2014) (quotation marks omitted); accord Eisa v. Immigration & Customs Enf't, 2008 WL 4223618, at *6 (S.D.N.Y. Sept. 11, 2008) (collecting cases); see Collins v. United States, 2000 WL 516892, at *6 (E.D.N.Y. Mar. 8, 2000) (denying audita querela relief where petitioner "could have raised [his claim] on direct appeal" and noting that "[p]rocedural default is not, by itself, grounds to invoke" the writ). To be sure, Daugerdas did directly appeal the Forfeiture Order but did not challenge the Forfeiture Order's joint and several nature. Daugerdas, 837 F.3d at 218. That said, this Court finds that Daugerdas could have raised the issue on direct appeal, and therefore his claim is barred.

Indeed, the argument raised (and ultimately accepted) in Honeycutt was not "so novel that its legal basis [was] not reasonably available to counsel" at the time of Daugerdas's direct appeal. Reed v. Ross, 468 U.S. 1, 16, 104 S.Ct. 2901, 82 L.Ed.2d 1 (1984). As long as, Daugerdas "had access to the United States Code and [a] dictionar[y]—the tools the Supreme...