United States v. Rising

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 23, 2015
_________________________________
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 14-1518
(D.C. Nos. 1:13-CV-01056-WYD and
GERALD R. RISING, JR., a/k/a Gerry 1:11-CR-00117-WYD-1)
Rising, (D. Colo.)
Defendant - Appellant.
_________________________________
ORDER DENYING CERTIFICATE OF APPEALABILITY*
_________________________________
Before HOLMES, MATHESON, and PHILLIPS, Circuit Judges.
_________________________________
On October 26, 2011, Gerald R. Rising pleaded guilty to one count of mail fraud,
one count of theft or embezzlement in connection with a healthcare program, and one
count of money laundering. In his plea agreement, Rising waived his right to appeal
his sentence; and he also waived his right to collaterally attack his prosecution,
conviction, or sentence except for any relief from a retroactive change to the
sentencing guidelines, for denial of the effective assistance of counsel, or for
prosecutorial misconduct. Ultimately, Rising was sentenced to a below-advisory-
guideline sentence of 66 months. Rising did not try to appeal his sentence.
*
This order is not binding precedent, except under the doctrines of law of the
case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive
value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
On December 2, 2014, Rising filed this 28 U.S.C.§ 2255 motion, raising four
claims: (1) ineffective assistance of counsel for failing to raise and argue meritorious
defenses and by advising Rising to plead guilty; (2) prosecutorial misconduct; (3)
ineffective assistance of counsel resulting in an excessive sentence and failure to
perfect an appealable error; and (4) actual innocence. On April 15, 2015, Rising filed
a second motion seeking an order on his § 2255 motion and entry of final judgment
and, on May 13, 2015, he filed a third. The district court denied Rising’s motions and
declined to issue a certificate of appealability. Rising has applied to this court for a
certificate of appealability to challenge the district court’s ruling. We deny that
request.
I. Factual and Procedural Background
On April 4, 2011, a federal grand jury charged Rising with one count of mail
fraud, one count of theft or embezzlement in connection with a health care program,
eighteen counts of money laundering, and eighteen counts of aiding or abetting
money laundering. The charges stemmed from Rising’s ownership and operation of a
business, Rural Health Plans Initiative Administration (RHPI), a closely held
Colorado corporation that sold and administered health-benefit and employee-welfare
plans to various business entities including school districts. Rising and RHPI
“represented that it would retain part of plan contributions, approximately 20%, for
administrative costs, and that the remainder was to be held in a designated trust
account to pay claims . . . and to purchase excess loss or stop-loss coverage . . .
through established insurance providers like Lloyd’s of London and AIG to cover any
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claims that exceeded $25,000.” Id. Rising also incorporated RHPI Captive Insurance
Co., Ltd. (RHPIC) in Anguilla, British West Indies to maintain residual fund
contributions. Plea Agreement 10. As stipulated in the plea agreement, RHPIC was
created “to avoid regulation by the Colorado Board of Insurance.” Id. at 11.
In 2003, RHPI began to experience financial problems after incurring “unplanned
for catastrophic losses.” Tr. of Change of Plea 25. As a solution, Rising used
incoming premium contributions to fund claims incurred in earlier months. From then
forward, Rising falsely represented to his customers that RHPI would maintain in
trust the money each plan holder contributed to its plans and use that money to pay
claims of each plan’s beneficiaries. He also falsely represented that insurance
companies, such as Lloyd’s of London and AIG, would provide stop-loss coverage at
$25,000, meaning that once RHPI had paid out $25,000, one of those insurance
companies would cover any further medical expenses. In fact, those policies did not
provide coverage until the medical expenses reached $125,000. Id. Through these
misrepresentations, RHPI significantly underestimated to its customers the risk that it
would not be able to pay out claims.
In 2008 and 2009, Rising “increased his salary in order to siphon monies held by
RHPIC for the benefit of plan beneficiaries.” Plea Agreement 11. In 2009 and 2010,
Rising “began to kite checks between various bank accounts he controlled for
himself, RHPI and RHPIIIC, in order to create a false impression as to the financial
status of the businesses as he solicited their sale.” Id.; see Tr. of Change of Plea 26
(admitting this fact to the court). Rising also “directed employees to falsely represent
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to various plan beneficiaries and employers that the claims for health care services
were in fact paid when they were not . . . .” Plea Agreement 11; see Tr. of Change of
Plea 27. Additionally, he “directed employees to send balance statements to plan
employers that falsely represented balances in their accounts because such statements
were influenced by the issuance of checks that were held at [Rising’s] direction, and
never sent.” Plea Agreement 11–12. In 2010, Rising had invoices mailed to plan
employers “that billed and created a false indebtedness to the employers for
payments RHPIC made of beneficiary and health care provider claims.” Id. at 12.
Rising retained Gregory Goldberg of Holland & Hart to represent him throughout
the criminal prosecution. See Appellant Rising’s Combined Opening Br. and Appl.
for a Certificate of Appealability 2. Afterward, Rising cooperated with the
prosecution, producing his financial records, helping decipher those records, and
meeting with victims. On October 26, 2011, Rising pleaded guilty to one count of
mail fraud, one count of theft or embezzlement in connection with a health care
program, and one count of money laundering. As a part of the plea agreement, the
parties stipulated that Rising had caused victim losses of more than $2.5 million but
not more than $7 million. As mentioned, as part of his plea agreement Rising also
agreed to waive his right under 28 U.S.C. § 2255 to collaterally attack his conviction
and sentence, except challenges based on a retroactive change in the guidelines,
ineffective assistance of counsel, or prosecutorial misconduct.
During the Rule 11 colloquy, Rising explained his criminal conduct to the district
court and admitted all stipulated facts in the plea agreement. The court advised
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Rising of the consequences of pleading guilty and thoroughly reviewed with him the
rights he was waiving. In addition, the court reviewed the plea agreement’s terms
with Rising, verified that Rising had reviewed the agreement with his attorney, and
verified that Rising was satisfied with his counsel’s performance.
Based on the presentence report, which incorporated the parties’ agreed guideline
calculations, the probation office recommended a sentence of 72 months, below the
applicable advisory range of 87 to 108 months (resulting from a total offense level
29, and a criminal history category I). Based on Rising’s “extraordinary” cooperation
in the investigation, the government recommended a sentence of 60 months. See
Government’s Resp. to Def.’s Mot. for Downward Departure and/or Variance from
the Sentencing Guidelines Pursuant to U.S.S.G. § 5K2.0 and 18 U.S.C. § 3553(a)
(Doc. 56) 1–2 (requesting a sentence of no less than 60 months); Tr. of Sentencing 20
(requesting a sentence of 60 months). Rising joined the government in its 60-month
recommendation. See Mot. for Downward Departure and/or Variance from the
Sentencing Guidelines Pursuant to U.S.S.G. § 5K2.0 and 18 U.S.C. § 3553(a) 7
(requesting a sentence below 60 months); Tr. of Sentencing 37 (requesting a sentence
of 60 months). Ultimately, the district court sentenced Rising to 66 months of
imprisonment.
On April 22, 2013, Rising filed this 28 U.S.C. § 2255 motion challenging his
sentence. On August 27, 2013, Rising also filed a Pro Se Motion for Partial Summary
Judgment, and on September 24, 2013, he filed a Pro Se Motion for an Evidentiary
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Hearing on Motion to Vacate, Set Aside or Correct Sentence Pursuant to 28 USC §
2255 by a Person in Federal Custody. The government responded and Rising replied.
Even before the district court ruled on the merits, Rising applied to this court for a
mandamus order directing the district court to decide his § 2255 motion, which this
court denied. After this, the district court denied Rising’s motions. In response, on
December 2, 2014, Rising filed a Pro Se Motion for Reconsideration of This Court’s
Order Denying Habeas Corpus Relief. The district court dismissed that motion for
lack of jurisdiction as a second or successive habeas petition. This appeal of the
initial § 2255 ruling followed.
II. Discussion
Because Rising proceeds pro se, we review his pleadings and filings liberally. See
Haines v. Kerner, 404 U.S. 519. 520–21 (1972); Lewis v. C.I.R., 523 F.3d 1272, 1273
n.2 (10th Cir. 2008). We must address the jurisdictional prerequisites of whether to
grant Rising a COA on his claims before we can reach the merits. 28 U.S.C. §
2253(c)(1)(B); United States v. Tony, 637 F.3d 1153, 1157 (10th Cir. 2011). We will
issue a COA only “if the [movant] has made a substantial showing of the denial of a
constitutional right.” § 2253(c)(2). A movant can satisfy this standard by
demonstrating that “reasonable jurists could debate whether . . . the [§ 2255 motion]
should have been resolved in a different manner or that the issues presented were
adequate to deserve encouragement to proceed further.” Tony, 637 F.3d at 1157(omission in original) (quoting Slack v. McDaniel, 529 U.S. 473, 484 (2000)).
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We conclude that Rising has not made an adequate showing here. Accordingly,
we deny his request for a COA and dismiss his appeal.
a. Evidentiary Hearing
At the outset, we will address Rising’s concerns over the district court’s denial of
an evidentiary hearing. Section 2255 requires an evidentiary hearing “[u]nless the
motion and the files and records of the case conclusively show that the prisoner is
entitled to no relief.” 28 U.S.C. § 2255(b). We review the district court’s decision for
abuse of discretion. See United States v. Harms, 371 F.3d 1208, 1210 (10th Cir.
2004); see also United States v. Moya, 676 F.3d 1211, 731 (10th Cir. 2012). “District
courts are not required to hold evidentiary hearings in collateral attacks without a
firm idea of what the testimony will encompass and how it will support a movant’s
claim.” United States v. Cervini, 379 F.3d 987, 994 (10th Cir. 2004). We conclude
that the district court did not abuse its discretion by denying Rising an evidentiary
hearing and deciding the case on the existing record.
Rising argues that the district court improperly made six findings of fact “without
conducting an evidentiary hearing, evaluating the facts, and, most importantly,
providing Rising with the Due Process requirements of the United States
Constitution.” Appellant Rising’s Combined Opening Br. and Appl. for a Certificate
of Appealability 1. These six findings are as follows:
 “I also find that Mr. Rising has raised merely the possibility that his counsel
made choices pursuant to a business model, not that he actually did.” Dist. Ct.
Op. 15.
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 “Indeed, Mr. Rising does not identify any specific instances where his attorney
Mr. Goldberg was forced to make, or made, choices to Mr. Rising’s
detriment.” Id. at 16.
 “I also find that Mr. Rising has not shown that he would have insisted on a trial
if counsel had done a more thorough investigation. Id. at 19.
 “Based upon the foregoing, I find no merit to Mr. Rising’s argument that his
counsel’s failure to investigate or prepare for trial or argue meritorious
defenses constituted ineffective assistance of counsel.” Id. at 23.
 “Finally, I find that defense counsel was not ineffective for advising Mr. Rising
to plead guilty and to cooperate.” Id.
 “I find that Mr. Rising cannot meet his burden of proving he is actually
innocent under either a freestanding or gateway claim.” Id. at 36.
We see no problems with any of the listed comments by the district court. We
note that four of the comments are legal conclusions premised on facts in the record
(the third, fourth, fifth, and sixth listed above), and the others are comments about the
insufficiency of the evidence Rising suggests he will offer.
b. Ineffective Assistance of Counsel
Rising argues that his trial counsel rendered constitutionally ineffective assistance
in multiple ways: by failing to raise and argue meritorious defenses, by advising him
to plead guilty, by continuing his representation despite a conflict of interest, by
permitting an excessive sentence, and by failing to perfect an appealable error.
In Strickland v. Washington, the Supreme Court announced a two-part test that
governs ineffective-assistance-of-counsel claims. 466 U.S. 668, 687 (1984). First,
“[a] petitioner must show that counsel’s performance was deficient.” Wiggins v.
Smith, 539 U.S. 510, 521 (2003). Second, a petitioner must show that counsel’s
deficiency “prejudiced the defense.” Id.8
“To establish deficient performance, a petitioner must demonstrate that counsel’s
representation fell below an objective standard of reasonableness.” Id. (internal
quotation marks omitted); see Strickland, 466 U.S. at 688 (“The proper measure of
attorney performance remains simply reasonableness under prevailing professional
norms.”). A petitioner must overcome a “strong presumption that counsel’s conduct
falls within the wide range of reasonable professional assistance.” Strickland, 466
U.S. at 689. To establish Strickland’s prejudice component, “[t]he defendant must
show that there is a reasonable probability that, but for counsel’s unprofessional
errors, the result of the proceeding would have been different. A reasonable
probability is a probability sufficient to undermine confidence in the outcome.” Id. at
694. The Strickland analysis applies in the context of guilty pleas as well. See
Missouri v. Frye, 132 S. Ct. 1399, 1403 (2012). “[A] defendant complaining that
ineffective assistance led him to accept a plea offer instead of going to trial [must]
show ‘a reasonable probability that, but for counsel’s errors, he would not have
pleaded guilty and would have insisted on going to trial.’” Id. (quoting Hill v.
Lockhart, 474 U. S. 52, 59 (1985)).
Counsel’s performance here was not deficient under any of Rising’s theories.
i. Failure to note and argue meritorious defenses and rendering
deficient advice
Rising asserts that his counsel was deficient in advising him to plead guilty
and thus to waive valid defenses. Rising complains that “[t]he entire defense was
centered around negotiating a plea of guilty, nothing else.” See Gerald Rising’s Pro
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Se Mem. of Args. & Authorities in Supp. of Mot. to Vacate, Set Aside, or Correct
Sentence Pursuant to 28 USC § 2255 by a Person in Federal Custody 3. Here we have
no trouble concluding that the advice to plead guilty was strategic (undoubtedly
weighing as part of the decision the government’s proof of Rising’s guilt) and was
not “below an objective standard of reasonableness.” Wiggins, 539 U.S. at 521. It
stands to reason that when faced with strong evidence of guilt, it is sound strategy to
cooperate with the government to try to gain a better outcome.1
Rising ignores the considerable benefits afforded him by the plea agreement.
For instance, the government agreed not to seek an upward departure, agreed to
dismiss multiple counts of the indictment, agreed not to pursue certain assets as
belonging to Linda Sue Rising, recommended a three-level reduction for acceptance
of responsibility, and ultimately recommended a downward departure based on
Rising’s cooperation as well as a variant sentence of 60 months. Absent his pleading,
and even assuming convictions just on the counts to which he pleaded guilty, Rising
would have faced an advisory sentencing range of 108 to 135 months (based on a
total offense level of 31 and a criminal history category of I). By pleading, Rising
reduced his guideline range to 87 to 108 months. And ultimately, based on the
1
On September 30, 2015, Rising filed a Motion for Submission of
Supplemental Case Authority, citing United States v. Washington, 619 F.3d 1252(10th Cir. 2010).We have reviewed Washington and find it provides Rising no help.
The case distinguishes “ordinary errors in applying the guidelines from complete
unfamiliarity with their basic structure and mechanics and conclude[s] that the latter
may amount to ineffective assistance of counsel.” Id. at 1259. Here, the record
demonstrates that Rising’s counsel was obviously more than familiar with the
guideline structure.
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government’s request for a downward departure, Rising received a 66-month
sentence, a substantial reduction from the sentence he likely would have received had
he not pleaded guilty and cooperated with the government.
Rising attempts to raise an ineffective assistance claim based on his counsel’s
failure to obtain the services of a forensic accountant or otherwise challenge the
government’s inability to establish a firm loss figure. But “[w]e evaluate conduct
from counsel’s perspective at the time, not in hindsight.” Hooks v. Workman, 689 F.3d
1148, 1189 (10th Cir. 2012) (citing Rompilla v. Beard, 545 U.S. 374, 381 (2005)).
Based on counsel’s statements, it appears that Rising’s records were complex and
unhelpful to his defense. See Tr. of Sentencing 16 (“Now the records themselves
amounted to about 70 boxes of financial records, plus some computer records. It was
massive.”). Rising has not explained how hiring a forensic accountant would have
been anything but futile. See id. (“[A]fter we tried to make sense of his records and
his own accountant tried to make sense of his records, they were essentially
worthless.”). Rising has failed to overcome the “strong presumption” that his
counsel’s performance was within the range of “reasonable professional assistance.”
Strickland, 466 U.S. at 689.
ii. Conflict of Interest
Rising alleges that defense counsel was ineffective because he suffered from a
conflict of interest: counsel purportedly followed what Rising now says is his firm’s
business model—pleading cases rather than trying them. We acknowledge that the
Sixth Amendment right to representation “includes the right to representation that is
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free from conflicts of interest.” Gardner v Galetka, 568 F.3d 862, 886 (10th
Cir.2009). If a conflict is established, prejudice is presumed. Id. at 886. Yet when a
conflict of interest is raised for the first time on collateral attack, the defendant “must
demonstrate that an actual conflict of interest adversely affected his lawyer’s
performance.” Cuyler v. Sullivan, 446 U.S. 335, 348 (1980).
“An actual conflict of interest results if counsel was forced to make choices
advancing other interests to the detriment of his client.” United States v. Alvarez 137
F.3d 1249, 1252 (10th Cir. 1998). “‘[T]o demonstrate an actual conflict of interest,
the petitioner must be able to point to specific instances in the record which suggest
an impairment or compromise of his interests for the benefit of another party.’” Id.(quoting Danner v. United States, 820 F.2d 1166, 1169 (11th Cir. 1987)). A mere
possibility of a conflict is insufficient. See Cuyler, 446 U.S. at 50.
Here, Rising simply states that the law firm’s business model existed and affected
counsel’s decision making. But he never alleges any specific instances where his
counsel acted to promote the interests of the firm over his interests. Quite simply,
Rising has failed to establish an actual conflict.
iii. Ineffective Assistance Resulting in an Excessive Sentence
and Failure to Perfect an Appealable Error
Rising claims that ineffectiveness of counsel led to an excessive sentence and a
failure to perfect an appealable error. Rising alleges the existence of a “secret
agreement” between defense counsel and the prosecution to stipulate to $3.5 million
as the amount of loss that would be used to calculate the guideline range under the
12
Sentencing Guidelines. Rising appears to allege that his counsel was ineffective
because he did not negotiate a lower figure. As mentioned, in the plea agreement the
parties stipulated to a loss of more than $2.5 million but not more than $7 million.
Under the Sentencing Guidelines applicable in this case, losses of more than $2.5
million but not more than $7 million fall under U.S. Sentencing Guidelines Manual §
2B1.1(b)(1)(J) (U.S. Sentencing Comm’n 2010), adding 18 levels. Rising’s assertion
that he provided the government with evidence proving that the loss was less than
$2.5 million fails the prejudice prong of Strickland since he stipulated on the record
that his offense involved losses between $2.5 million and $7 million.
To succeed on his claim that his counsel was ineffective for allowing an
excessive sentence, Rising must show that his sentence was in fact excessive.
Rising’s sentence was below his advisory-guideline sentencing range, and we thus
presume its reasonableness. United States v. Perez-Jiminez, 654 F.3d 1136, 1147
(10th Cir. 2011). Because Rising’s sentence was properly calculated, he cannot
succeed on his ineffective-assistance-of-counsel claim based on his receiving an
excessive sentence.
c. Prosecutorial Misconduct
Rising argues prosecutorial misconduct, specifically that the prosecution erred in
not presenting exculpatory evidence to the grand jury. Rising’s allegation of
wrongdoing on the prosecutor’s part is misplaced. “A grand jury investigation is not
an adversarial process.” United States v. Jones, 160 F.3d 641, 646 (10th Cir. 1998);
see United States v. Williams, 504 U.S. 36, 51, 55 (1992) (holding that the
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government need not present exculpatory evidence in its possession to the grand
jury). Regardless, as the district court pointed out, Rising’s guilty plea precludes
inquiry into the merits of defenses applicable to the indictment. See Order 31, Nov. 4,
2014 (citing Tollett v. Henderson, 411 U.S. 258, 266 (1973)).
d. Actual Innocence
Rising argues actual innocence. This claim is precluded by his guilty plea and his
statements to the district court during the Rule 11 hearing. “When a criminal
defendant has solemnly admitted in open court that he is in fact guilty of the offense
with which he is charged, . . . [h]e may only attack the voluntary and intelligent
character of the guilty plea . . . .” See Tollett, 411 U.S. at 267. As the district court
correctly notes, Rising has not challenged that he pleaded guilty voluntarily and
intelligently. When he pleaded guilty, Rising provided the court a factual basis to
support his guilty plea. Additionally, Rising confirmed to the court that he
understood he was waiving his right to a trial and his rights at trial. Rising offers no
additional evidence to support his claim and merely challenges the sufficiency of the
government’s evidence. That argument is barred.
III. Conclusion
Based on the foregoing, we DENY the certificate of appealability. We DENY
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Rising’s motion for an expedited appeal as moot and DISMISS this appeal.
Entered for the Court
Gregory A. Phillips
Circuit Judge
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