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United States v. Allmendinger

United States District Court, E.D. Virginia, Richmond Division

February 1, 2017



          Robert E. Payne Senior United States District Judge

         This matter is before the Court on the AMENDED MOTION TO VACATE, SET ASIDE, OR CORRECT A SENTENCE UNDER 28 U.S.C. § 2255 submitted by Christian M. Allmendinger, a federal inmate proceeding by counsel (ECF No. 491) (hereinafter "§ 2255 Motion"). Allmendinger contends that his trial and appellate counsel were ineffective, thereby violating the Sixth Amendment right to counsel.[1] Specifically, Allmendinger demands relief because:[2]

Claim One: "Counsel was ineffective in relying on an invalid defense instead of recommending that Petitioner accept the plea agreement offer of ten years." (Id. at 5.)
Claim Two: "Petitioner was denied the effective assistance of counsel on appeal." (Id. at 13.)
Claim Three: "Counsel failed to preserve for de novo review the issue that petitioner's money laundering convictions are barred by the 'merger problem.'" (Id. at 18.)
Claim Four: "Counsel had a conflict of interest, as co-counsel had applied for employment with the Department of Justice at the time of petitioner's trial." (Id. at 19.)

         The Government has responded, asserting that Allmendinger's claims lack merit. (ECF No. 525.) Allmendinger has filed a Reply. (ECF No. 529.) The United States has also filed GOVERNMENT'S MOTION TO COMPEL COUNSEL TO PROVIDE AN AFFIDAVIT IN RESPONSE TO PETITIONER'S INEFFECTIVE ASSISTANCE OF COUNSEL

         CLAIMS FILED PURSUANT TO 28 U.S.C. § 2255 AND MEMORANDUM IN SUPPORT (ECF No. 4 98) . That Motion to Compel will be denied as moot because the Government has submitted a declaration from Barry Pollack, Allmendinger's trial counsel, as an attachment to its response (ECF No. 525-1). For the reasons stated below, Allmendinger's § 2255 Motion will be denied.


         On September 7, 2010, a grand jury indicted Allmendinger on one count of mail fraud conspiracy (Count One); three counts of mail fraud (Counts Two through Four); one count of conspiracy to commit money laundering (Count Eight); three counts of money laundering (Counts Nine through Eleven); and two counts of securities fraud (Counts Fifteen and Sixteen). (INDICTMENT, ECF No. 3.) On October 21, 2010, Allmendinger and his co-defendant, Adley Abdulwahab, were arraigned and trial was set for March 9, 2011. (ECF Nos. 36 and 38). On January 6, 2011, an agreed discovery order was entered. (ECF No. 100) . However, the Government had provided some discovery even before the Order was entered.

         On February 1, 2011, the grand jury returned a Superseding Indictment charging the same counts with minor modifications. (SUPERSEDING INDICTMENT, ECF No. 140.) The defendants were arraigned on the Superseding Indictment on February 22, 2011. The trial date was not changed.

         By Memorandum Opinion and Order entered on March 7, 2011, the Court granted Allmendinger's and Abdulwahab's separate motions to sever their trials. United States v. Allmendinger, NOS. 3:10CR248-01, 3:10CR248-02, 2011 WL 841514, at *1 (E.D. Va. Mar. 7, 2011); (see ECF Nos. 177-78). Allmendinger's trial was rescheduled to begin on March 14, 2011. (ECF No. 182.)

         On March 9, 2011, the Government filed a Motion to Dismiss Count Ten of the Superseding Indictment with respect to Allmendinger. (ECF No. 184.) By Order entered on March 11, 2011, the Court granted the Government's motion. (ECF No. 188.)

         On March 14, 2011, the jury trial commenced. After the Government rested, Allmendinger moved for a judgment of acquittal as to all counts pursuant to Federal Rule of Criminal Procedure 29. (Mar. 18, 2011 Tr. 937-80, ECF No. 427.) The Court granted the motion as to a mail fraud count (Count Four) and a securities fraud count (Count Sixteen), but denied it with respect to the remaining counts. (ECF No. 203.) At the close of evidence, defense counsel renewed the motion for a judgment of acquittal. (Mar. 21, 2011 Tr. 1081-82, ECF No. 432.) The Court denied the motion. (ECF No. 204.) After a day of deliberations, the jury returned its verdict, finding Allmendinger guilty of the remaining seven counts of the Superseding Indictment. (ECF No. 207, at 1-3.)

         On November 9, 2011, the Court entered judgment against Allmendinger and sentenced him to 540 months of imprisonment. (J. 3, ECF No. 384.) Allmendinger appealed. The United States Court of Appeals for the Fourth Circuit affirmed Allmendinger's convictions and sentence. United States v. Allmendinger, 706 F.3d 330, 344 (4th Cir. 2013). The Supreme Court of he United States subsequently denied Allmendinger's petition for a writ of certiorari. Allmendinger v. United States, 133 S.Ct. 2747 (2013).


         The Fourth Circuit summarized the evidence of Allmendinger's guilt as follows:

Allmendinger and Brent Oncale founded a company known as "A&O" in Houston, Texas, in late 2004. The company sold life settlement investments, which are interests in life insurance policies. Until the end of 2006, A&O sold "bonded life settlements, " which were interests in particular life insurance policies. The investments were for fixed terms of between four and seven years. If the insured died during the term, the life insurance company would pay a benefit, but if the insured remained alive, a reinsurance bond, which A&O purchased from Provident Capital Indemnity (ttPCI"), was designed to pay out and take over the life insurance policy (so long as the life insurance policy premiums were current).
Allmendinger and Oncale marketed and sold A&O's bonded life settlements directly to investors. In 2005, they hired Adley Abdulwahab to help market the products through his company, Houston Investment Center ("HIC"). In marketing A&O's products, both orally and through written materials they created, Allmendinger, Oncale, and Abdulwahab lied about many critical facts. For example, they represented that investor funds were placed in a segregated account dedicated to those payments and used right away to pay policy premiums up front; in reality, although A&O paid the premiums, it had no separate account for that purpose and it paid them only as they became due. Indeed, money invested with A&O was commingled in a general operating account from which A&O paid its bills. Over the time that A&O was in business, Allmendinger, Oncale, and Abdulwahab took advantage of this structure, misappropriating millions of dollars from this account for themselves.
The three men also misrepresented A&O's size, staff, and record of earning returns for its investors. In 2005 and 2006, A&O's websites, whose content Allmendinger and Oncale had created, listed fictional people as company principals, falsely stated that A&O had officers in multiple states, greatly exaggerated the number of A&O employees, and falsely stated that A&O had particular legal and business professionals on its staff. The sites also stated that A&O had "enabled [their] clients to leverage $375 million into $800 million in less than five years, " when in actuality, no investor had received any pay out at that time.
In 2006, Allmendinger and Oncale invited Abdulwahab, who was excelling at A&O, to become a partner. Thereafter, the three men each held an equal interest in A&O and shared authority over the company.
By late 2006, regulators from different states began to send inquiries to A&O regarding its life settlement product, largely based on concerns that A&O was selling an unregistered security. These inquiries prompted the three partners to consult with Florida attorney Michael Lapat, who assisted A&O in setting up hedge funds that were backed by life settlements. By early 2007, A&O began offering fractionalized interests in these funds that they called "capital appreciation bonds."
This format change did not stem the tide of regulator inquiries, however, and Allmendinger, Abdulwahab and Oncale agreed to sell A&O to a company called "Blue Dymond." Before the sale, however, Allmendinger, Abdulwahab, and Oncale helped themselves-for what Allmendinger believed was one final time-to several hundred thousand dollars from A&O's operating fund. After this raid on A&O's coffers, only $2.9 million remained in A&O's bank accounts-not even half of the amount A&O needed to pay the premiums on all of its policies up through their bonding dates.
Unbeknownst to Allmendinger, however, Abdulwahab and Oncale had constructed an elaborate secret plan to purchase the company themselves and continue running it. Blue Dymond-the buyer of A&O-was little more than a front for Abdulwahab and Oncale; it was a shell company created and funded by Abdulwahab and Oncale with the assistance of attorney Russell Mackert and without the knowledge of Allmendinger.
Under the terms of the sale, the partners were to receive $750, 000, with the expectation of an additional $250, 000 in the 18 months following the sale. While Allmendinger received his $750, 000, Oncale and Abdulwahab-unbeknownst to Allmendinger- received only $750 and secretly continued the business through Blue Dymond. Through August 31, 2007, the date of the sale, Allmendinger had personally received $8, 455, 033.60 from A&O; Oncale had received $7, 303, 496.98; and Abdulwahab had received $2, 889, 366.70. Allmendinger used his money to live an exceptionally extravagant lifestyle, purchasing expensive jewelry, cars, and other items, including a $2 million home.
In September 2007, Abdulwahab and Oncale hired David White to serve as A&O's president. During this time, A&O continued generally to operate in much the same manner as it had before Allmendinger sold his interest. Indeed, A&O continued to employ the fraudulent marketing materials Allmendinger and his co-conspirators had created. The remaining principals, however, accelerated their misappropriation of investor funds. In the fall of 2007, A&O funds amounting to $11 million were deposited in Mackert's account and distributed to Abdulwahab and Oncale. A&O ceased making premium payments on many of its life insurance policies, causing them to lapse, and A&O stopped taking new investor funds in early 2008. Thereafter, Mackert took over the management of A&O and subsequently placed A&O into bankruptcy. From November 2004 until 2008, A&O's more than 800 investors lost more than $100 million.
In January 2010, Allmendinger was interviewed by federal prosecutors and law enforcement agents and informed that he would be indicted based on his involvement with A&O. In the following weeks, Allmendinger began to hide his assets. His father opened a bank account in February 2010, and more than $676, 000 in funds that Allmendinger had previously held with his father in a joint account was deposited into the new account. His father then used some of those funds to pay more than $300, 000 of Allmendinger's credit card debt.

United States v. Allmendinger, 706 F.3d 330, 333-35 (4th Cir. 2013) (internal citations omitted) (alteration in original).


         To demonstrate ineffective assistance of counsel, a convicted defendant must show first, that counsel's representation was deficient and second, that the deficient performance prejudiced the defense. Strickland v. Washington, 466 U.S. 668, 687 (1984) . To satisfy the deficient performance prong of Strickland, the convicted defendant must overcome the "'strong presumption' that counsel's strategy and tactics fall 'within the wide range of reasonable professional assistance.'" Burch v. Corcoran, 273 F.3d 577, 588 (4th Cir. 2001) (quoting Strickland, 466 U.S. at 689). The prejudice component requires a convicted defendant to "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." Strickland, 466 U.S. at 694. In analyzing ineffective assistance of counsel claims, it is not necessary to determine whether counsel performed deficiently if the claim is readily dismissed for lack of prejudice. Id. at 697.


         In Claim One, Allmendinger alleges that "counsel was ineffective in relying on an invalid defense instead of recommending that [Allmendinger] accept the plea agreement offer of ten years." (§ 2255 Mot. 5.) First, it is appropriate to outline the legal principles pertaining to Claim One and then to see the claim for what it really is and then measure it against the controlling legal principles and the record.

         A. Counsel's Obligations With Regard To Guilty Plea Negotiations Generally

         "During plea negotiations defendants are 'entitled to the effective assistance of competent counsel.'" Lafler v. Cooper, 132 S.Ct. 1376, 1384 (2012) (quoting McMann v. Richardson, 397 U.S. 759, 771 (1970)). Generally, claims of ineffective assistance of counsel during the plea process fall into three categories. First, "the [complete] failure of a defense attorney to timely inform his client of a plea offer constitutes unreasonable professional assistance." United States v. Brannon, 48 F.App'x 51, 53 (4th Cir. 2002) (citing United States v. Blaylock, 20 F.3d 1458, 1465-66 (9th Cir. 1994)); see Griffin v. United States, 330 F.3d 733, 737 (6th Cir. 2003). Second, a defense attorney's inaccurate advice or misinformation in conveying a plea offer may constitute deficient assistance. Brannon, 48 F.App'x at 53 (citing Paters v. United States, 159 F.3d 1043, 1047-48 (7th Cir. 1998); see United States v. Merritt, 102 F.App'x 303, 307-08 (4th Cir. 2004); Wolford v. United States, 722 F.Supp.2d 664, 688 (E.D. Va. 2010) (concluding that counsel was deficient where he "misled [the petitioner] into believing that she had some possibility of prevailing at trial on the basis of several non-viable defenses"). Third, incomplete advice in conveying a plea also may provide a basis for a claim of ineffective assistance of counsel. See Wolford, 722 F.Supp.2d at 689 (concluding that "counsel's incorrect and incomplete legal advice to [the petitioner] during the plea negotiation process was objectively unreasonable" (citing Strickland, 466 U.S. at 688)); see also United States v. Day, 969 F.2d 39, 43 (3d Cir. 1992) ("[A] defendant has the right to make a reasonably informed decision whether to accept a plea offer." (citing Hill v. Lockhart, 474 U.S. 52, 56-57 (1985); Von Moltke v. Gillies, 332 U.S. 708, 721 (1948))). Here, Allmendinger contends that he is entitled to relief because Pollack provided incomplete and incorrect advice in conveying what Allmendinger erroneously refers to as a plea offer.

         B. Claim One: What Is It?

         Claim One is comprised of two somewhat related notions. First, there is the notion that trial counsel was ineffective for not "recommending that [Allmendinger] accept the plea agreement offer of ten years." (§ 2255 Mot. 5.) That, indeed, is the gravamen of Claim One. Second, there is the linked notion that trial counsel chose to rely on an "invalid defense" instead of recommending acceptance of the so-called plea offer. (Id.) Neither proposition is borne out by the record.

         To begin, the record shows that there never was a plea agreement offer of ten years for Allemendinger to accept. The record shows only that, in February 2010, there were discussions about a cooperating plea agreement that would carry a ten-year maximum sentence which Allmendinger rejected out of hand. And, the record also shows that the theory of defense in play in February 2010 when those discussions occurred was a lack of scienter that was based on what Allmendinger told trial counsel and that Allmendinger simply did not tell his counsel the truth.

         1. The Notion That Counsel Was Ineffective For Failing To Advise Allemdinger To "Accept The [So-Called] Plea Agreement Offer"

         The predicate of Claim One is the assertion that there existed a plea agreement offer of ten years that Allmendinger could have accepted. This notion springs from a single conclusory statement in a document entitled UNSWORN DECLARATION OF CHRISTIAN ALLMENDINGER[3] in which it is said that "Pollack informed me that the Government offered me a plea agreement of 10 years." (ECF No. 482-1, at 26.) The record actually disproves that assertion.

         Both Pollack and the prosecutor, Michael Dry, swear that, in February 2010, there was no plea agreement offer. To the contrary, there were only discussions about a possible plea agreement pursuant to which Allmendinger would cooperate in the prosecution of other A&O principals and be charged with an offense carrying a ten year term of imprisonment.[4]

         In January 2010, Dry decided to accelerate the investigation into A&O by interviewing company executives in an effort to secure their cooperation, thinking that a successful prosecution required the direct testimony of an A&O executive, notwithstanding that there were clearly some misrepresented facts on the A&O website. To that end, on January 26, 2010, Dry interviewed Allmendinger. Dry advised Allmendinger's counsel, Jason Ross, that Allmendinger was facing significant prison time and asked whether Allmendinger would cooperate with the Government to try to "minimize his criminal exposure."

         In February 2010, Pollack, who by then had been retained by Allmendinger to replace Ross, telephoned Dry who explained that Allmendinger likely would be charged and, if so, he faced significant criminal exposure. Dry queried Pollack whether Allmendinger would plead guilty and cooperate against other A&O executives. Pollack and Dry "discussed the broad contours of a potential plea agreement in which Allmendinger would plead guilty to charges that would provide for a 10-year statutory maximum sentence." (Dry Decl. ¶ 5.)

         Dry made clear that any offer would have to be approved by his management and that the discussions represented only what Dry would recommend. (Id.) Dry also informed Pollack that other A&O executives were being interviewed and that if one of them decided to cooperate before Allmendinger, Dry's recommendation for plea terms respecting Allmendinger would worsen. (Id.)

         On March 23, 2010, Dry, who by then had heard nothing further about Allmendinger's willingness to cooperate, interviewed another A&O principal, Brent Oncale. Later that same day, Oncale agreed to plead guilty to "charges providing for a 10-year statutorily capped sentence" and to cooperate against Allmendinger and others at A&O. (Id. ¶ 6.) At that point, it was no longer even possible for Allmendinger to secure such terms. (Id. ¶ 7.) In any event, sometime in the ensuing month, Pollack telephoned Dry and advised that Allmendinger "was not interested in pursuing any potential plea agreement that likely would result in a 10-year sentence of imprisonment." (Id.)

         Pollack's version of the events of February 2010 confirms Dry's statements. Pollack's recollection is that he talked to Dry "to explore the broad parameters of what type of plea offer the Government might be willing to extend to Mr. Allmendinger." (Pollack Decl. ¶ 7) . Pollack never received a written plea offer from the Government. (Id.) However, he recalled that:

[T] he Government indicated it would likely be willing to extend to Mr. Allmendinger a plea offer pursuant to which there would be a statutory maximum of ten years, . . . and there would be a joint recommendation for a ten-year sentence.

(Id.) Pollack also recalled that there would be a possibility for a post-sentence reduction if Allmendinger provided "substantial assistance to the Government." (Id.)

         Shortly after the discussions with Dry, Pollack communicated the potential plea terms to Allmendinger, (id. ¶¶ 9-10), and Pollack was satisfied that Allmendinger "understood the contours of the proposed potential plea offer." (Id. ΒΆ 11.) After those discussions, Allmendinger "decided not to pursue ...

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