United States v. Eliyahu Weinstein

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
Nos. 14-3122 & 15-1039
________________
UNITED STATES OF AMERICA
v.
ELIYAHU WEINSTEIN,
Appellant
________________
Appeal from the United States District Court
for the District of New Jersey
(D.N.J. Nos. 3-11-cr-00701-001 & 3-14-cr-00219-001)
District Judge: Honorable Joel A. Pisano
________________
Argued April 19, 2016
Before: McKEE, Chief Judge, AMBRO, and RESTREPO, Circuit Judges
(Filed: August 12, 2016)
Eric M. Creizman
Creizman LLC
565 Fifth Avenue, 7th Floor
New York, NY 10017
Richard A. Greenberg
Steven Y. Yurowitz [Argued]
William J. Dobie
Newman & Greenberg
950 Third Avenue, 32nd Floor
New York, NY 10022
Counsel for Appellant
Paul J. Fishman
United States Attorney
Mark E. Coyne (Argued)
Assistant U.S. Attorney
Office of United States Attorney
970 Broad Street, Room 700
Newark, NJ 07102
Counsel for Appellee
________________
OPINION*
________________
AMBRO, Circuit Judge
Eliyahu Weinstein pleaded guilty in two cases now consolidated before us on
appeal. In the first (“Weinstein I”) he admitted to operating a Ponzi scheme from 2004-
2011 whereby he misappropriated hundreds of millions of dollars that victims thought
they were investing in specific real estate transactions. In the second (“Weinstein II”) he
admitted to engaging in similar conduct from 2012-2013.
Weinstein tried unsuccessfully to withdraw his Weinstein I guilty plea, claiming
(1) the District Court participated in plea negotiations in violation of Federal Rule of
Civil Procedure 11, and (2) his attorneys rendered ineffective assistance of counsel
because they were actually conflicted when they encouraged him to plead guilty. He also
tried unsuccessfully to have Weinstein II dismissed as a breach of the Weinstein I plea
agreement and a Double Jeopardy violation. Those unsuccessful attempts are the basis of
his current appeals. For the reasons that follow, we affirm.
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
I. Background
The Weinstein I indictment alleges that Weinstein defrauded multiple victims from
2004 to 2011. He convinced one victim, Morris Rotenstein, to invest in an insurance
transaction, but then used for unauthorized purposes the money the latter invested.
Rotenstein later told the FBI that he decided to invest with Weinstein based in part on
assurances from Mark Harris, Weinstein’s attorney from the law firm Proskauer Rose
LLP, that the investment was above board.
Plea negotiations began in November 2012. After the District Court denied
Weinstein’s pretrial motions in December 2012, counsel for the prosecution and defense
met with Judge Pisano in his chambers. According to Weinstein, his lawyers reported that
the conversation focused on plea negotiations and that Judge Pisano gave assurances he
would “remember” the Government’s past plea offers during sentencing if Weinstein
pleaded guilty and made restitution. J.A. 149. Weinstein also claims his counsel said that
Judge Pisano warned he had never had an acquittal in his courtroom. There is no direct
evidence of what was said during that off-the-record meeting, and Judge Pisano denied
Weinstein’s second-hand account of the exchange.
The parties failed to reach an agreement despite continuing plea negotiations.
Later in December, attorneys from Proskauer (including Harris) joined Weinstein’s
criminal defense team. They reviewed the case to prepare for trial but ultimately
recommended that Weinstein plead guilty. He did not do so until January 2013 when,
according to him, Robert Cleary, one of his attorneys from Proskauer, reported that Judge
Pisano said during an ex parte phone call that “all doors [would] be open” if Weinstein
3
were to plead guilty and make restitution but “all doors [would] be closed” if he were
convicted after a trial. J.A. 150. The only direct evidence of what Judge Pisano allegedly
said ex parte on the phone is Cleary’s unsigned affidavit, which differs from Weinstein’s
second-hand version of events and says (among other things) that the Judge “never
articulated any preference for how the case should proceed or be resolved.” J.A. 247.
Judge Pisano denied making the remarks Weinstein attributed to him.
Weinstein then signed a plea agreement providing for a possible sentence of
restitution and anywhere from 0-300 months’ imprisonment. As part of the plea
agreement, the Government pledged not to file further charges against Weinstein “for his
conduct, now known to the Government,” from June 2004 through January 3, 2013, the
date of his guilty plea. J.A. 97.
Nearly five months after he pleaded guilty in Weinstein I, Weinstein was arrested
in Weinstein II on a new complaint charging him with additional Ponzi-scheme-related
offenses. The complaint alleged, among other things, that Weinstein had violated the
conditions of his bail from Weinstein I, which prohibited him from completing any
financial transactions worth more than $1,000 without advance notice to and approval
from a special counsel.
After the complaint in Weinstein II was issued, Weinstein moved three times to
withdraw his Weinstein I guilty plea, primarily citing two grounds for withdrawal: that
Judge Pisano participated in plea negotiations in violation of Federal Rule of Criminal
Procedure 11; and that the Proskauer attorneys rendered ineffective assistance because
they had conflicts of interest. As proof of a Rule 11 violation, Weinstein presented
4
Cleary’s unsigned affidavit and numerous declarations containing second-hand
descriptions of Judge Pisano’s alleged participation in plea negotiations. As to the
ineffective-assistance claim, Weinstein argued that Harris was likely to face criminal
liability or be called as a prosecution witness because of his involvement in the
Rotenstein transaction, so he could not have provided effective representation to
Weinstein during plea negotiations.
Judge Pisano denied Weinstein’s motions, citing insufficient proof of a Rule 11
violation and concluding that defense counsel was not actually conflicted. He sentenced
Weinstein to 22 years’ imprisonment in Weinstein I.
Then, in April 2014, Weinstein II proceeded to indictment. It alleged that
Weinstein committed additional Ponzi-scheme-related offenses from 2012 to 2013. The
scheme involved, among other things, fraudulent representations related to supposed
investments in pre-IPO Facebook shares and real estate. Weinstein entered a conditional
guilty plea that allowed him to move to dismiss the Weinstein II indictment and appeal
any adverse ruling on that motion. He sought dismissal on the grounds that the Weinstein
I plea agreement barred the Government from prosecuting him in Weinstein II and that
Weinstein II violated the Double Jeopardy Clause of the U.S. Constitution. The District
Court declined to dismiss the Weinstein II indictment and sentenced Weinstein to 135
months’ imprisonment, only 24 months of which would run consecutive to the sentence
in Weinstein I.
Weinstein now appeals the District Court’s refusal to allow for the withdrawal of
his Weinstein I guilty plea and its refusal to dismiss the Weinstein II indictment.
5
II. Standard of Review
We review the denial of a motion to withdraw a guilty plea for abuse of discretion.
United States v. Siddons, 660 F.3d 699, 703 (3d Cir. 2011). In so doing, we review the
District Court’s factual findings for clear error and its legal conclusions de novo. United
States v. Brown, 250 F.3d 811, 815 (3d Cir. 2001). Similarly, “when reviewing a motion
to dismiss an indictment, our standard of review is mixed.” United States v. Shenandoah,
595 F.3d 151, 156 (3d Cir. 2010). “We exercise plenary review over the District Court’s
legal conclusions and review any challenges to its factual findings for clear error.” United
States v. Huet, 665 F.3d 588, 594 (3d Cir. 2012).
III. Discussion
A. The Motion to Withdraw the Weinstein I Guilty Plea
“Once a court accepts a defendant’s guilty plea, the defendant is not entitled to
withdraw that plea simply at his whim.” United States v. Jones, 336 F.3d 245, 252 (3d
Cir. 2003). Rather, he bears the “substantial” burden of “showing a ‘fair and just reason’
for the withdrawal of his plea” prior to sentencing. United States v. King, 604 F.3d 125,
139 (3d Cir. 2010) (quoting Fed. R. Crim. P. 11(d)(2)(B)). To determine whether he has
met that burden, “district courts consider whether: (1) [he] ‘asserts his innocence;’ (2)
[he] proffered strong reasons justifying the withdrawal; and (3) the government would be
prejudiced by the withdrawal.” Id.
Weinstein has neither “meaningfully reasserted his innocence,” Jones, 336 F.3d at
252-53, nor demonstrated that the withdrawal would not prejudice the Government, see
id. at 255. Nonetheless he contends there are two compelling reasons justifying the
6
withdrawal of his guilty plea: (1) Judge Pisano violated Rule 11 by participating in plea
negotiations, and (2) his attorneys were conflicted and therefore rendered ineffective
assistance.
We conclude that Judge Pisano did not abuse his discretion in ruling that
Weinstein had not made the substantial showing necessary to warrant the withdrawal of
his guilty plea. Though Rule 11(c)(1) establishes a “bright line” prohibiting the court
from participating in plea discussions, see United States v. Ebel, 299 F.3d 187, 191 (3d
Cir. 2002), the evidence that Judge Pisano actually crossed that line falls short.1
Weinstein claims Judge Pisano violated Rule 11 on two occasions: when he spoke with
both sides’ counsel in chambers and when he had an ex parte phone call with Cleary. But
the record support for Weinstein’s assertions is wanting. Weinstein cites only
unsubstantiated hearsay to support his claims. Initially this hearsay appeared only in his
self-serving declaration, which was riddled with minor inaccuracies. See Gov’t Br. at 23.
Later it appeared in the declarations and affidavits of his attorneys and his spiritual
adviser (one of which was unsigned), but even those statements are not enough for
Weinstein to meet his “substantial” burden. First of all, that Weinstein could have
presented those statements to the District Court earlier suggests they are post hoc
attempts to bolster his position. Moreover, two of the declarations contain only double
hearsay (i.e., they relay what Harris and Cleary allegedly said that Judge Pisano allegedly
said to others), J.A. 184, 244-45, and Cleary’s affidavit is entitled to no weight because it
1
We reject Weinstein’s argument that Judge Pisano should not have been the one
to rule on the Rule 11 motion because it lacks any support in our case law.
7
is merely an unsigned draft affidavit, J.A. 246. (We also note that even if we were to give
weight to the Cleary affidavit, the comments it attributes to Judge Pisano do not indicate
a Rule 11 violation. See United States v. Frank, 36 F.3d 898, 903 (9th Cir. 1994)
(explaining that Rule 11(c)(1) “does not establish a series of traps for imperfectly
articulated oral remarks”). Finally, though it is not dispositive, Judge Pisano repeatedly
denied making any of the problematic statements attributed to him, and Weinstein stated
under oath at his plea hearing that he was not induced to plead guilty and that no one had
made any promises to him other than what appeared in the plea agreement.2 Thus the
record lacks any credible evidence to substantiate the alleged Rule 11 violation, and it
was not an abuse of discretion to deny Weinstein’s requests to withdraw his Weinstein I
guilty plea.
Second, Weinstein argues that defense counsel was ineffective because the
Proskauer attorneys were operating under an actual conflict of interest. An attorney is
actually conflicted if, in connection with his representation of a client, he is very likely to
face criminal charges or be a witness for the prosecution. See Gov’t of the Virgin Islands
v. Zepp, 748 F.2d 125 (3d Cir. 1984). And representation by an actually conflicted
attorney is ineffective and violates the Sixth Amendment without any need to show
prejudice. See Mickens v. Taylor, 535 U.S. 162, 166 (2002) (quoting Strickland v.
Washington, 466 U.S. 668, 694 (1984)).
2
In the alternative, Weinstein argues in a footnote that he is entitled to withdraw
his guilty plea because his attorneys lied about Judge Pisano’s ex parte remarks. But
“arguments raised in passing (such as, in a footnote), but not squarely argued, are
considered waived.” John Wyeth & Bro. Ltd. v. CIGNA Int’l Corp., 119 F.3d 1070, 1076
n.6 (3d Cir. 1997).
8
According to Weinstein, because Rotenstein relied on Harris’s comments when he
decided to invest with Weinstein, Harris “faced potential criminal liability for aiding and
abetting . . . [,] and his independent personal knowledge of the circumstances of the
charges made him a [likely] witness for the prosecution.” United States v. Morena, 547
F.3d 191, 198 (3d Cir. 2008). But Weinstein mischaracterizes Harris’s situation. The
latter’s representations to Rotenstein were not false (let alone criminal) because the
insurance transaction would have been legitimate had Weinstein not misappropriated the
investment. With no evidence to suggest that Harris assisted in the misappropriation, he
did not face potential criminal liability. Nor was Harris likely to be a witness for the
prosecution. The Government could have proven that Weinstein defrauded Rotenstein
with testimony from Rotenstein and a summary witness describing what Weinstein did
with the investment; Harris’s testimony was not needed.
Weinstein compares this case to Government of the Virgin Islands v. Zepp, where
defense counsel could not represent his client without putting himself at risk of criminal
charges, and a damning stipulation from defense counsel was actually used to convict the
defendant. See 748 F.2d at 137-39. But Harris was not at risk of criminal liability for his
actions, and there is no reason to think that he would have been a prosecution witness in
this case. Thus defense counsel was not actually conflicted and the District Court did not
abuse its discretion when it ruled that Weinstein could not withdraw his Weinstein I
guilty plea on the ground that his counsel had been ineffective.
B. The Motions to Dismiss the Weinstein II Indictment
9
Weinstein next appeals the District Court’s refusal to dismiss the Weinstein II
indictment. He first argues that the Weinstein I plea agreement—which prohibits the
Government from initiating “any further criminal charges against Eliyahu Weinstein for
his conduct, now known to the Government, from in or about June 2004” through the
date of his guilty plea (January 3, 2013), J.A. 97—bars the Government from bringing
criminal charges against him for any financial fraud he may have committed before he
pleaded guilty, including the frauds alleged in the Weinstein II indictment. According to
Weinstein, the “conduct” referred to in the Weinstein I plea agreement encompasses any
crimes committed using the modus operandi he employed to commit the crimes charged
in Weinstein I and would include the criminal acts at issue in Weinstein II.
To say we disagree requires little thought beyond the text. “Plea agreements,
although arising in a criminal context, are analyzed under contract law standards.” United
States v. Nolan-Cooper, 155 F.3d 221, 236 (3d Cir. 1998). And under those standards the
plain meaning of the agreement controls. See United States v. Davenport, 775 F.3d 605,
609 (3d Cir. 2015). Here the word “conduct” plainly refers to any acts or omissions by
Weinstein. The agreement bars the Government only from charging Weinstein in
connection with specific criminal acts of which it was aware at the time he pleaded
guilty; it does not immunize him from prosecution when (as in Weinstein II) the
Government later learns of a criminal act he committed before pleading guilty, even if the
newly discovered act resembled the crimes to which he pleaded guilty. In context, it
would be absurd to say that “conduct” refers to a type of crime and not a criminal act.
10
Weinstein then argues that the charges in Weinstein II duplicate the charges in
Weinstein I and therefore violate the Double Jeopardy Clause, which “prohibits
successive prosecution or multiple punishment for” the same offense. Witte v. United
States, 515 U.S. 389, 391 (1995). True enough, the District Court evaluated Weinstein’s
Double Jeopardy challenge using the test from Blockburger v. United States, 284 U.S.
299 (1932), and that was incorrect. Blockburger applies where the issue is “whether two
offenses are sufficiently distinguishable to permit the imposition of cumulative
punishment.” Brown v. Ohio, 432 U.S. 161, 166 (1977). Where, as here, the issue is
whether the Government has improperly divided a single conspiracy into multiple
conspiracies, the “totality of the circumstances” test from United States v. Liotard, 817
F.2d 1074, 1078 (3d Cir. 1987), controls. See United States v. Rigas, 605 F.3d 194, 212
(3d Cir. 2010).
But that misstatement was harmless. Under Liotard we consider factors like “the
‘locus criminis’ of the alleged conspiracies [(i.e., where the crime was committed)]”; “the
degree of temporal overlap between the conspiracies”; “the overlap of personnel between
the conspiracies”; and “the similarity in the overt acts charged and role played by the
defendant in each indictment.” United States v. Smith, 82 F.3d 1261, 1267 (3d Cir. 1996).
Here they indicate there was no Double Jeopardy violation because the Weinstein I and
Weinstein II conspiracies involved different victims in different locations, different time
periods, different co-conspirators, and different schemes.
* * * * * *
11
We have considered Weinstein’s remaining arguments and find them
unpersuasive. He has presented no credible evidence establishing that Judge Pisano
violated Rule 11 or that Harris was actually conflicted. Nor has he presented sufficient
reason to believe that Weinstein II breaches his Weinstein I plea agreement or is
otherwise barred by Double Jeopardy. Thus we affirm.
12