Daniel Sullivan v. United States

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-2023
DANIEL SULLIVAN,
Petitioner-Appellant,
v.
UNITED STATES OF AMERICA,
Respondent-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 3067 — Rubén Castillo, Chief Judge.
____________________
ARGUED NOVEMBER 14, 2017 — DECIDED DECEMBER 8, 2017
____________________
Before BAUER, EASTERBROOK, and SYKES, Circuit Judges.
PER CURIAM. A jury found Daniel Sullivan and his brother
John guilty of two counts of committing wire fraud in connec-
tion with a home-remodeling scheme they operated for sev-
eral years. The district judge sentenced both brothers to 168
months’ imprisonment, and on direct appeal we affirmed
their sentences. See United States v. Sullivan, 765 F.3d 712 (7th
Cir. 2014). They then filed separate pro se collateral challenges
under 28 U.S.C. § 2255, each contending that their attorneys
2 No. 15-2023
were constitutionally ineffective. The district judge denied
both § 2255 motions without holding an evidentiary hearing.
The present appeal concerns the denial of Daniel’s motion.
We granted Daniel a certificate of appealability on his
claims that his attorneys rendered constitutionally ineffective
assistance by failing to (1) raise an objection under Batson v.
Kentucky, 476 U.S. 79 (1986), to the exclusion of potential ju-
rors based on race; and (2) hire an expert witness to testify
about the amount of loss attributable to Daniel for purposes
of the Guidelines. We affirm.
I. BACKGROUND
Our opinion from the Sullivans’ direct appeal details the
case’s background. The brothers operated various companies
that offered remodeling services in Chicago. Through sub-
contractors they performed legitimate work for clients who
paid in cash, but they padded their profits by duping dozens
of elderly, unsophisticated homeowners into refinancing their
homes to pay substantial sums for work they never intended
to finish. At one point the Circuit Court of Cook County per-
manently enjoined both John and a company the brothers co-
owned from engaging in the home-repair business in the city
of Chicago; the brothers, however, circumvented the injunc-
tion by creating a new company and installing an employee
as its nominal president. They also falsified contracts to hide
their fraudulent activity.
In September 2010 a grand jury charged the Sullivans with
wire fraud, and a year later they were tried together in front
of Judge Blanche Manning. The jury heard testimony from
No. 15-2023 3
victimized homeowners, the brothers’ employees, a subcon-
tractor they used for some projects, and various bankers and
investigators. The jury found the defendants guilty of two
counts of wire fraud each.
After Judge Manning retired, the case was transferred to
Judge Rubén Castillo, who found both brothers responsible
for causing about $750,000 in losses to their victims and sen-
tenced them to 168 months’ imprisonment each.
The Sullivans each appealed, arguing that the district
judge erred in calculating the amount of loss for purposes of
the Guidelines and in imposing various upward adjustments
based on the judge’s findings that the scheme involved vul-
nerable victims (U.S.S.G. § 3A1.1(b)(1)), the violation of a
prior judicial injunction (id. § 2B1.1(b)(9)(C)), sophisticated
means (id. § 2B1.1(b)(10)(C)), and mass marketing (id.
§ 2B1.1(b)(2)(A)). John also challenged an adjustment he re-
ceived for being an organizer or leader of the scheme (U.S.S.G.
§ 3B1.1(a)). We rejected all these contentions and affirmed
both brothers’ sentences.
John and Daniel then filed pro se motions for collateral re-
lief under 28 U.S.C. § 2255, and for the first time their cases
diverged. Daniel argued that his attorney rendered constitu-
tionally ineffective assistance by failing to (1) object to the ex-
clusion of jurors on a potentially discriminatory basis, (2) hire
an expert witness to testify about the loss amount.
Judge Castillo summarily dismissed Daniel’s motion in a
one-paragraph order that reads in its entirety as follows:
After a careful review of this recently filed peti-
tion under 28 U.S.C. § 2255, in light of the trial
record and appeal in this case, this Court easily
4 No. 15-2023
concludes that Petitioner has not established
any non-waived constitutional error in these
proceedings. For these reasons, this petition is
denied with prejudice. Petitioner has not estab-
lished the need for a hearing. Finally, the Court
denies a certificate of appealability for this or-
der.
We granted Daniel a certificate of appealability on both issues
raised in his motion. See 28 U.S.C. § 2253(c)(2).
II. DISCUSSION
Daniel, now represented by newly recruited counsel, ar-
gues that the district court erred in denying his request for an
evidentiary hearing on his claims that his trial attorneys ren-
dered ineffective assistance—first by failing to object to the
supposed exclusion of Hispanics and African Americans from
the jury and, second, by failing to hire an expert to testify
about the loss amount. A district court must conduct an evi-
dentiary hearing before denying a motion for collateral relief
unless the record “conclusively show[s] that the prisoner is
entitled to no relief.” 28 U.S.C. § 2255(b); Anderson v. United
States, 865 F.3d 914, 919 (7th Cir. 2017). This court reviews for
abuse of discretion a district court’s decision to deny an evi-
dentiary hearing. Mitchell v. United States, 846 F.3d 937, 941
(7th Cir. 2017).
A. Batson Issue
We first consider Daniel’s contention that his attorneys
rendered ineffective assistance when they did not object un-
No. 15-2023 5
der Batson that the government systematically excluded His-
panics and African Americans from the jury. The record con-
tains no statistics about the racial composition of the venire,
so Daniel focuses on the government’s use of a peremptory
challenge against an African-American man who was a crim-
inal-defense lawyer.
The potential juror came up at the start of the second day
of jury selection, when the government’s attorney, Patrick
Pope, disclosed to the judge that one of his colleagues had
spoken briefly with a member of the venire outside the court-
room. Pope, who did not know the potential juror’s name, in-
itially described him as a paralegal who worked for an attor-
ney representing Rod Blagojevich during his criminal trial.
Pope explained that his colleague had recognized the poten-
tial juror from Blagojevich’s trial and had briefly discussed
Blagojevich’s sentencing with him. When asked to describe
the potential juror, Pope said that he was a “large Afri-
can-American male.” The judge’s clerk then identified him as
attorney Keenan Saulter.
Saulter’s responses during jury selection were unremark-
able. He confirmed that he was an attorney employed at a law
firm. He said that he was “very close to multiple criminal law-
yers and some prosecutors” but denied that those relation-
ships would prevent him from being impartial. He also af-
firmed that he “absolutely” would follow the judge’s instruc-
tions about the law. Daniel’s lawyers asked no follow-up
questions of Saulter, and John’s lawyer asked him only to clar-
ify the extent to which he had been a party to a lawsuit.
The government, without objection from the defense, used
one of its peremptory strikes to remove Saulter from the jury
pool. Later, at the end of jury selection, the district judge
6 No. 15-2023
quipped that the parties “didn’t get to the lawyer,” to which
Pope replied: “Certainly not a defense lawyer and certainly
not with where his previous employment was.”
Before he can show that his attorneys were ineffective in
failing to object to Saulter’s removal, Daniel first needs to
show that such an objection would have had potential merit.
Batson establishes a three-step process for challenging a per-
emptory strike. Miller-El v. Cockrell (“Miller-El I”), 537 U.S.
322, 328–29 (2003). First, the defendant must make out a prima
facie case that a strike was exercised on the basis of race.
Id. at 328. This requires a defendant to point to evidence “rais-
ing a suspicion that discrimination occurred.” United States v.
Cruse, 805 F.3d 795, 807 (7th Cir. 2015) (quoting United States
v. Stephens, 421 F.3d 503, 512 (7th Cir. 2005)). If the defendant
clears that hurdle, the burden of production then shifts to the
government to articulate a reason for striking the juror that is
nondiscriminatory. Miller-El I, 537 U.S. at 328. This reason
need not be “persuasive, or even plausible,” as long as it’s race
neutral. Purkett v. Elem, 514 U.S. 765, 768 (1995). Third, the
court must decide whether the government’s proffered basis
is genuine or pretextual. See Miller–El v. Dretke, 545 U.S. 231,
239–40 (2005).
Daniel has not plausibly explained how his attorneys
could have cleared even the first step of the Batson inquiry.
He urges us to infer discrimination from the fact that other
jurors were not struck even though they too revealed that they
knew practicing lawyers. But that argument glosses over the
significant difference between knowing a lawyer and being
one. See United States v. Alvarez-Ulloa, 784 F.3d 558, 566 (9th
Cir. 2015) (noting “widespread” concern among lawyers and
No. 15-2023 7
courts that “jurors with legal experience will bias or comman-
deer a jury”); United States v. Bolden, 545 F.3d 609, 613–14 (8th
Cir. 2008) (affirming use of peremptory challenge to strike Af-
rican-American woman who had “twelve years of legal train-
ing”); United States v. Johnson, 941 F.2d 1102, 1109 (10th Cir.
1991) (affirming use of peremptory challenge to strike Afri-
can-American woman who worked as secretary for legal aid).
Daniel cannot make out a prima facie case for discrimination
by merely pointing out the race of the stricken juror, see United
States v. McMath, 559 F.3d 657, 664 (7th Cir. 2009), but that es-
sentially is all he has done here.
Because it is clear from the record that Daniel’s proposed
Batson challenge would have failed at step one, that is the end
of the inquiry, see United States v. Johnson, 756 F.3d 532, 537
(7th Cir. 2014), and the district judge did not need to conduct
an evidentiary hearing to determine that counsel was not in-
effective in declining to raise a meritless issue.
B. Loss Calculation
Daniel also argues that his attorneys should have hired an
expert to rebut the amount of actual loss attributed to him for
purposes of the Guidelines. Daniel asserts that expert testi-
mony would have shown the correct amount to be no more
than $400,000, or perhaps even $200,000—well below the ap-
proximately $750,0000 amount calculated by Judge Castillo,
who imposed a corresponding 14-level upward adjustment,
see U.S.S.G. § 2B1.1(b)(1)(H) (2012 ed.). An amount from
$200,000.01 to $400,000 would have triggered a 12-level ad-
justment; a loss from $120,000.01 to $200,000 a 10-level adjust-
ment. See U.S.S.G. § 2B1.1(b)(1)(F–G) (2012 ed.). For Daniel,
8 No. 15-2023
the 12-level adjustment would have meant a Guidelines im-
prisonment range of 121 to 151 months (or even 97 to 121
months for a 10-level adjustment), as opposed to the 151-to-
188 range the judge calculated.
Significantly, Daniel does not argue that the exact figure
influenced how Judge Castillo weighed the factors under
18 U.S.C. § 3553(a). He thus concedes—albeit implicitly—that
any error in the loss calculation was harmless as long as the
correct amount was more than $400,000.00.
The government’s position at sentencing was that the refi-
nancing jobs were mostly fraudulent, whereas jobs the Sulli-
vans did for cash involved “honest work,” so its loss calcula-
tion focused on the revenue they received from refinancing
jobs. The government sought to estimate the amount of loss
attributable to them by drawing principally on the trial testi-
mony of two witnesses: Rick Kozma, a financial examiner
who reviewed records of the Sullivans’ business accounts,
and Kryzstof Koterba, the Sullivans’ primary subcontractor.
Kozma testified that during the relevant period (2002 to 2006)
the records showed $1.27 million in refinancing proceeds ob-
tained from title companies. During that same period, the rec-
ords showed payments of $587,000 to Koterba, $62,000 to an-
other subcontractor, and $300,000 to a hardware store named
Remodeler’s Supply. Koterba, for his part, testified that the
most he ever received from the Sullivans for a single job was
“maybe up to $8,000.”
To account for the possibility that some low-dollar refi-
nancing jobs might have been legitimate, the government ex-
cluded from the calculations any refinancing jobs for which
the Sullivans received less than $15,000. In setting this $15,000
threshold, the government relied on Koterba’s testimony that
No. 15-2023 9
the Sullivans never paid him more than $8,000 for a job; the
extra $7,000 was an estimate of the portion of the Sullivans’
total purchases from Remodeler’s Supply that could be ex-
pected to go towards materials for an $8,000 job. The govern-
ment urged the judge to find that the Sullivans caused an ac-
tual loss of $1.077 million to 28 homeowners.
The Guidelines instruct district courts to reduce the
amount of loss by the “fair market value” of the services a de-
fendant performs before his fraud is discovered, see U.S.S.G.
§ 2B1.1 cmt. n.3(E)(i), so at sentencing the parties debated the
amount of credit the Sullivans should receive for any services
they’d performed for those homeowners the government
identified as victims of the scheme, i.e., those from whom the
brothers received at least $15,000 in refinancing proceeds.
The government argued that the Sullivans weren’t entitled to
any credit because they’d falsely held themselves out as li-
censed contractors, see id. § 2B1.1 cmt. n.3(F)(v)(I). The Sulli-
vans countered that they should receive credit for work per-
formed by their subcontractors, who were licensed.
The judge sided with the Sullivans and found that they
could deduct the labor and material cost of work performed
by subcontractors. So the judge subtracted from the $1.077
million figure both $224,000 for labor costs (28 jobs at $8,000
each) and $105,000 for materials (a pro rata portion of the
$300,000 total they spent at Remodeler’s Supply plus an extra
ten percent to account for materials purchased elsewhere). Be-
cause the resulting figure, $748,601.90, was more than
$400,000 but not more than $1 million, the judge imposed a
14-level increase under section 2B1.1, as opposed to the 16-
level increase the government initially had urged. The judge
added that if he’d erred in giving the defendants credit for
10 No. 15-2023
work done by subcontractors, then he would find that a loss
amount of over a million dollars overstates the seriousness of
the Sullivans’ crime. He then sentenced both brothers to 168
months’ imprisonment, which is near the low end of Daniel’s
advisory range of 151 to 188 months.
On direct appeal this court affirmed the district judge’s
loss calculation, in part, because the Sullivans presented “no
evidence of their net proceeds from the refinance projects, no
invoices from Koterba or other subcontractors, nor any re-
ceipts for the materials they purchased from other locations.”
Sullivan, 765 F.3d at 727.
Daniel has not articulated a plausible theory for how the
district judge’s loss calculation could be nearly twice too high.
He initially suggested that he was not associated with one of
the companies (New Look Home Services) that John used to
engage in fraudulent activity. But that contention conflicts
with the testimony at trial, and he seems to have abandoned
it on appeal. Daniel also asserted that he should have been al-
lowed to testify about the value of work performed by his
staff and to deduct all of the expenses associated with running
the businesses with his brother. But the judge already ruled
that the Sullivans’ misrepresentation about their being li-
censed barred them from receiving an offset for work not
done by licensed subcontractors. Daniel does not explain how
the fair market value of the work completed by licensed sub-
contractors could be more than the sum calculated by Judge
Castillo, and it would be quite perverse for the Sullivans to
receive credit for expenses such as the salaries of the telemar-
keters they hired to cold-call their victims.
With no reason to doubt the district court’s calculations, it
is unclear what an expert could have done to slash the loss
No. 15-2023 11
calculation. Perhaps expert testimony would have led the dis-
trict judge to calculate a loss amount that was slightly less, but
there is no basis in Daniel’s submissions or in the record for
reducing the amount down to the critical $400,000 threshold.
The record reveals the judge’s estimation to be conservative,
so an evidentiary hearing would not have helped Daniel es-
tablish that that counsel’s failure to hire an expert amounted
to ineffective assistance. See U.S.S.G. § 2B1.1 cmt. n.3(C) (clar-
ifying that district court “need only make a reasonable esti-
mate of the loss”); Spiller v. United States, 855 F.3d 751, 754 (7th
Cir. 2017) (recognizing that no evidentiary hearing is required
when allegations in § 2255 petition are conclusory).
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
judgment denying Sullivan’s § 2255 motion.