United States v. Novak ( 2016 )

UNITED STATES DISTRICT COURT
F()R THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
v. Criminal Case No. 10~220 (TFH)
ANDREW NOVAK,
Defendant.
MEMORANDUM OPINION
Pending before the Court are pro se defendant Andrew Novak’s (l) l\/Iotion to Set Aside,
Vacate, and Reverse Judgment of Conviction, pursuant to 28 U.S.C. § 2255 [ECF No. 25], and
(2) Motion for an Evidentiary Hearing [ECF No. 40]. Defendant seeks to withdraw his guilty
plea to a single count of willfully making and subscribing a false federal income tax return in
violation of 26 U.S.C. § 7206(1), arguing that counsel’s ineffective assistance rendered
defendant’s guilty plea not voluntary and intelligent Upon careful consideration of defendant’s
motion under section 2255, the government’s response, defendant’s reply, and the entire record
herein, the Court will deny both motions for the reasons provided below.
"[A] claim that the ineffective assistance of counsel rendered a plea not voluntary and
intelligent must be evaluated under the [two-part] test for ineffective assistance set forth in
Stricklamz’ v. Washz'ngton, 466 U.S. 668 [] (1984)." Um``tea’ States v. Hanson, 339 F.3d 983, 990
(D.C. Cir. 2003) (citing Hill v. Lockhart, 474 U.S. 52, 58 (1985)). "First, the defendant must
show that counsel’s performance was deficient . . . Second, the defendant must show that the
deficient performance prejudiced the defense."' Stricklana’, 466 U.S. at 687. As to counsel’s
performance, the defendant must overcome a "strong presumption that counsel’s conduct falls
within the wide range of reasonable professional assistance" given the totality of the
circumstances. ld. at 689. As to prejudice in the context of a challenge to a guilty plea, "the
defendant must show that there is a reasonable probability that, but for counsel’s eirors, he
would not have pleaded guilty and would have insisted on going to trial." Hill, 474 U.S. at 59.
"Unless a defendant makes both showings," the claim will be denied. Stric/cland, 466 U.S. at
687.
The Court initially observes the following. When defendant signed the government’s
plea offer, he also waived indictment, waived his right to trial by jury, and signed a Statement
of Offense in which he certified "under penalties of perjury that the facts recited within the
Statement of Offense are true and correct." Statement of Offense 5 [ECF No. 9]. According
to the Statement of ()ffense, beginning in 2002 and continuing through 2007, defendant and a
friend engaged in a series of transactions as part of a scheme to steal and misapply funds from
the advertising company that employed defendant. Ia’. at l. Under the scheme, defendant
directed his friend, who owned and operated a consulting company, to submit "Letters of Intent
for Services" to the advertising company for services that would never be provided. Id. Next,
defendant generated fictitious invoices, which were submitted to the advertising company,
causing it to issue checks to the consulting company as payment for the fictitious services. Ia'. at
l-Z. The friend then wrote checks from the consulting company’s business account to defendant,
representing approximately 90 percent of the proceeds generated from the fictitious invoices. Id.
at 2. The total income defendant received through the scheme was $2,321,764. Id. at 3.
Defendant knew he was required by law to declare this income on his federal income tax returns,
but he chose not to do so and instead submitted false income tax returns during this period. Ia’. at
2-3. The resulting tax loss to the internal Revenue Service ("IRS") totaled $814,744. Ia’. at 3.
At his plea hearing, defendant was placed under oath and partook in a thorough
colloquy with the Court. Sept. 9, 2010 Tr. of Plea 5 [ECF No. 35-2]. The Court found
defendant competent to enter a plea after eliciting, among other things, that defendant was 43
years old, college educated, and able to understand the proceedings. Id. at 5-6. Defendant
indicated he was satisfied with defense counsel’s work. Ia'. at 7. After the Court provided a
detailed account of the Statement of Offense and the government’s plea offer, defendant
affirmed that the facts contained in the Statement of Offense were true and that he understood
both the plea offer and the rights he was waiving. Id. at 5~23. The Court concluded
defendant was voluntarily and knowingly pleading guilty, and accepted defendant’s guilty plea.
Ia'. at 23-24.
Prior to sentencing, defendant was interviewed by a United States Probation Officer
who prepared a Presentence Investigation Report ("Presentence Report"). "[D]uring the
presentence interview, defendant agreed with the conduct described in the Statement of
Offense as presented to the Court prior to his guilty plea" and he "accept[ed] responsibility."
Presentence Report 7 [ECF No. 22]. In preparation for his sentencing, defendant through
counsel submitted a Memorandum In Aid of Sentencing, in which defendant again indicated
that he accepted responsibility for his criminal conduct and, notably, informed the Court that
he repaid the diverted funds to the advertising company and began to repay the IRS. Def.’s
Memo. In Aid of Sentencing 5~6, 21 n. 19 [ECF No. 16]. Additionally, defendant submitted
what the Court deemed to be "lengthy materials," including a "rather remarkable number of
character letters" and defendant’s own letter to the Court accepting responsibility for his
criminal conduct. See Def.’s Letter to the Court l-4 [ECF No. 16-6].
4
At sentencing, after the Court heard from defense counsel and the government,
defendant personally addressed the Court and again accepted responsibility for his criminal
conduct, stating "I’m responsible for my behavior and for stealing money that wasn’t mine. I
only blame myself. I was raised to tell the truth and to admit to my mistakes. . . . Plain and
simple, there are no excuses. I committed a crime, and I am ashamed of myself for doing so."
Dec. 6, 2010 Tr. of Sentencing 4~20 [ECF No. 35-3]. The Court considered the factors
identified in 18 U.S.C. § 3553(a), including defendant’s expression of remorse and efforts to
make restitution after he was caught, and ultimately sentenced defendant to a term of 18
months of imprisonment and 12 months of supervised release, which reflected a downward ~
variance from the 30 to 37 months of imprisonment recommended under the Sentencing
Guidelines. Id. at 20~28.
Now, in support of his motion under section 2255, defendant asserts that counsel
rendered ineffective assistance on account of two failings. Def.’s Memo. of Arguments &
Authorities in Support of Mot. to Vacate Sentence Pursuant to 28 USC § 2255 ("Def. ’s
Memo.") 12-22 [ECF No. 25~1]. First, he asserts that counsel failed to investigate the
defense that defendant committed no ‘scheme’ to defraud anyone, as there were no victims
because defendant returned the diverted funds to the advertising company, which suffered no
losses. Ia’. at 12-20. Second, he asserts that counsel failed to argue the defense that defendant
was not guilty of failing to report and pay income tax because the income the government
attributed to him was actually the advertising company’s income. Ia'. at 20~22. As a result of
counsel’s ineffective assistance, defendant continues, his guilty plea was neither knowing nor
voluntary. Id. at 22-24.
Defendant’s assertions reflect, at best, his confusion regarding the offense to which he
pleaded guilty and, at worst, a strained and belated attempt to assert his innocence. First, the
Court reminds defendant that, as noted in the Presentence Report, "[t]he victim in this case is
5
the Internal Revenue Service." Presentence Report 6. The government did not prosecute
defendant for defrauding the advertising company, but rather, it prosecuted him for making
false statements on his federal income tax returns, which resulted in a tax loss for the IRS in
the amount of $814,744.53. Information l-4 [ECF No. 1]. Moreover, the fact that defendant
ultimately returned the diverted funds to the advertising company after he was caught does not
retroactively excuse defendant’s failure to declare the diverted funds on`` his federal income tax
returns. As defendant concedes, he deposited and continuously controlled the diverted funds
in his personal bank account for a period of approximately five years, returning it only after
federal authorities interrupted his scheme. See Def.’s Memo. at 5 ("The [diverted funds] were
simply set aside, in a place where they were readily available to [the advertising company]
when [defendant], the creator of such profits, deemed it prudent. . . . [Defendant’s]
determination of when was ‘prudent’ to reveal his strategy was interrupted by the FBl
investigation."); Def.’s Decl. 1 9 [ECF No. 25-2] ("The money market account where the
diverted profits were deposited was my account, and . . . commingled with my own funds . . .
."); see generally Rutkin v. United Slates, 343 U.S. l30, 137 (1952) ("An unlawful gain, as
well as a lawful one, constitutes taxable income when its recipient has such control over it
that, as a practical matter, he derives readily realizable economic value from it. That occurs
when cash . . . is delivered by its owner to the taxpayer in a manner which allows the
recipient freedom to dispose of it at will[.]").
6
To the extent defendant suggests counsel improperly focused his efforts on negotiating
a plea agreement rather than on investigating the defenses noted above,‘ defendant apparently
ignores the fact that by the time he retained counsel he had already confessed to federal
authorities. As defendant explains in the declaration attached to his motion under section 2255,
[a]fter speaking with the F.B.I. l took the advice of people close to
me, and l looked for and acquired legal representation. l did not
think that l needed a lawyer because l had not committed a crime. l
spoke freely with the F.B.I. rather than exercising my right to remain
silent. l cooperated in the investigation, and it was the information l
provided and my explanation of the records involved and the spread
sheets l personally prepared that would eventually result in all
involved becoming aware of what occurred.
Def.’s Decl. 1 12 [ECF No. 25~2]. Indeed, defendant continued to confess his actions even after
he retained counsel, apparently against his counsel’s advice: "l requested a face-to-face meeting
with my business partner to the chagrin [oi] my attorney so that l could inform her what l had
done[.]" Def.’s Letter to the Court 2 [ECF No. 16-6].
In short, even assuming, as defendant contends, that counsel chose not to investigate or
argue the defenses that (l) defendant had committed no scheme to defraud anyone because the
advertising company suffered no losses and (2) the income the government attributed to him
was actually the advertising company’s income, the Court concludes that counsel’s decisions
not to pursue such implausible defenses, and to instead focus on negotiating a plea agreement,
‘ In the declaration defendant attached to his motion under section 2255, defendant states, in pertinent part, the
following about counsel:
Everyone told me what a fine job he had done. I have seen his file, and it is clear
he spent time on the case. However, one thing remains clear. . . . He never
understood that he was representing a person who had not committed a crime, or
if he did understand, it was not as important as it was to "get the best deal
possible."
Novak Declaration ‘\] 27.
7
were not "outside the wide range of professionally competent assistance" under the totality of
the circumstances in this case. Strickland, 466 U.S. at 960; see ia’. at 961 ("[W]hen a defendant
has given counsel reason to believe that pursuing certain investigations would be fruitless or
even harmful, counsel’s failure to pursue those investigations may not later be challenged as
unreasonable.");``cf United States v. Hanson, 339 F.?>d 983, 991 (D.C. Cir. 2003) (concluding
"any competent attorney would . . . have advised [defendant] that he stood little chance of
obtaining an acquittal at trial [where] [t]he evidence of [the offense] charged was
overwhelming, while [defendant’s] only defense . . . was exceedingly weak."). Accordingly,
defendant fails to demonstrate "that counsel’s performance was defrcient." Strickland, 466
U.S. at 687.
Furthermore, even if defendant could show that counsel was deficient for the reasons
he asserts, he still would need to demonstrate prejudice. However, given the strength of the
government’s evidence in light of defendant’s voluntary confessions and disclosures, the
weakness of his alleged defenses, and the additional exposure defendant would have faced had
he elected to be prosecuted by indictment and proceed to trial,z defendant benefited greatly
from his decision to plead guilty. The Court, therefore, concludes there is no reasonable
probability that, but for counsel’s alleged deficiencies, defendant would not have pleaded guilty
and would have insisted on going to trial. Accordingly, defendant fails to demonstrate prejudice.
See Hill, 474 U.S. at 59; Strickland, 466 U.S. at 687.
2 The Court observes that although the government’s single~count information was based on defendant’s willfully
making and subscribing a false federal inform tax retum for the year 2004, Information l-4, the Statement of
Offense provided that defendant knowingly submitted false income tax returns for the years 2002 through 2007,
Statement of Offense 2-3.
In sum, defendant fails to make either showing required under the two-part test for
ineffective assistance set forth in Strickland. Because defendant’s argument that his plea was
not voluntary or intelligent was premised on his assertion that counsel rendered ineffective
assistance, this argument necessarily fails as well. Defendant otherwise fails to demonstrate that,
given the totality of the circumstances noted above, his plea was not voluntary or intelligent. See
In re Sealed Case, 283 F.3d 349, 352 (D.C. Cir. 2002) (noting Court looks "to the ‘totality of the
circumstances’ to determine if the plea was properly accepted" and considers factors including
the judge’s inquiry, the defendant’s level of intelligence, whether he was represented by counsel,
the complexity of the charge against him, and his own statements at the plea hearing).
For the foregoing reasons, the Court will deny the Motion to Set Aside, Vacate, and
Reverse Judgment of Conviction, pursuant to 28 U.S.C. § 2255 [ECF No. 25]. Additionally,
because "the motion and the files and records of the case conclusively show that the prisoner is
entitled to no relief," United States v. Morrison, 98 F.3d 619, 625 (D.C. Cir. 1996), the Court
will deny the Motion for an Evidentiary Hearing [ECF No. 40]. See ia’. ("A judge need not
conduct an evidentiary hearing before denying a petition for relief under § 2255 when ‘the
motion and the files and records of the case conclusively show that the prisoner is entitled to no
relief."’). An appropriate order will accompany this opinion.
/" /_ /
march _L§f;``ois / ap
Thomas F. Hogan
Senior United States District]udge