Government Responds To Zach Scruggs Arguments To Undo Guilty Plea - 061811

Case 3:07-cr-00192-NBB -SAA Document 392
Filed 06/17/11 Page 1 of 37
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI UNITED STATES OF AMERICA v. DAVID ZACHARY SCRUGGS CRIMINAL NO. 3:07CR192
GOVERNMENTS MEMORANDUM OF LAW AND REPLY TO PETITIONERS RESPONSE IN OPPOSITION TO THE GOVERNMENTS MOTION TO DISMISS1 Comes now the United States of America by and through the United States Attorney for the Northern District of Mississippi and submits this its reply to Petitioners response to the Governments Motion To Dismiss, and would respectfully show unto the Court the following to-wit: INTRODUCTION AND BACKGROUND The Court is being called upon to decide whether Petitioner was actually innocent of the crime to which he pled guilty and the charges in the indictment. Petitioner, through counsel, would have the Court believe that he was oblivious to the criminality that surrounded him. However, stipulations of expected testimony and speculative testimony about Petitioners state of mind prove nothing. Neither the law nor the facts favor Petitioner, so he has commissioned his attorneys to rewrite the history of this case, making everyone a bad guy except Petitioner. He has encouraged or at least acquiesced in their misstatements of the law and the facts and their disregard for
For purposes of this reply, the government would incorporate the Memorandum of Law and Exhibits attached to its Motion to Dismiss (hereinafter Govt. Motion to Dismiss) and will refer to the Petitioners subsequent response as Petitioners Response. The government will reference all other pleadings in this case by their document number on the docket.
accuracy.2 During the pendency of this litigation, Petitioner has alleged that he was not in the room on November 1, 2007, when money was discussed, but on the other hand, if he was, he was disengaged from the conversation. Now, Petitioner opines that he might have been on his Blackberry. There is simply no basis in evidence for those statements. Additionally, at page 6 of his response, Petitioner asserts that he has expressly denied any knowledge of the bribe. While Petitioner may have made that statement at the end of his change of plea hearing or at sentencing, he has not done so in the form of testimony, under oath and subject to crossexamination. Petitioner has repeatedly argued to the Court that he pled guilty because he was afraid Joey Langston would testify that he was involved in Wilson v. Scruggs. Yet, he waived that argument when he voluntarily pled guilty and abandoned his renewed 404(b) hearing where he could have called Langston as a witness to establish what his testimony would be. The evidence and Petitioners own pleading established that Petitioner knew that Langston would not testify he was criminally involved in the Wilson case, but rather simply aware of it.3 In reality, the pleadings filed by Petitioners counsel have been consistently disingenuous - and in reality he pled guilty because the government offered him an extremely favorable plea agreement. By pleading guilty he received a government recommendation of probation, whereas a conviction on
For purposes of this reply, the Government would submit Petitioner has repeatedly mis-quoted and miscited purported evidence and law but to address each and every inconsistency would require an excruciatingly lengthy memorandum. Suffice it to say, the Court heard the testimony in this matter, viewed the exhibits and can decide the applicable law. The Government is not admitting any purported allegations of fact, re-citations of evidence or statements of the law submitted by Petitioner. The testimony of Judge David Sanders and Attorney Anthony Farese at the May 9, 2011, hearing and Petitioners own pleading established that the 404(b) issue had been clarified for Petitioner and his counsel prior to his plea.
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the original charges would have subjected him to a lengthy prison sentence. Petitioner was dismayed that the Court actually sentenced him to confinement. Finally, Petitioner argues that his plea of guilty is infirm because his attorney, Anthony Farese, abandoned his ethical obligations when the government used Farese to co-opt Joey Langston to be a witness against him. The evidence and the record as a whole established that there was no conflict of interest. Petitioner permitted the dual representation and signed a written waiver. At the time Langston pled guilty, there was no evidence that he would even potentially be a witness against Petitioner. Petitioner then fired Farese and hired a new team of lawyers. The new legal team had full knowledge of the evidence against Petitioner, including the potential testimony of Langston, and advised him to plead guilty. There simply was no conflict and Petitioners decision to plead guilty was provident. Neither Mr. Tony Farese, nor the new legal team, did anything that adversely impacted Petitioner in a way that would effect the validity of his guilty plea. When Petitioner pled to misprision of a felony, he stated under oath that he agreed with the Governments factual basis, which clearly established a scheme and artifice to deprive Johnny Jones of his property. His plea was therefore provident and he knowingly and voluntarily pled to a crime that is completely unaffected by the Supreme Courts decision in Skilling. Regardless, even if Skilling were applicable to Petitioners Information, any error in the plea was harmless, because the Information, Factual Basis and Elements support misprision of an ordinary wire fraud. Petitioner has also wholly failed to disprove the fact that he joined in the conspiracy to corruptly influence a Judge and when he learned that money actually changed hands as a quid pro quo, he took no affirmative act to withdraw from the conspiracy. He actively participated in 3
a discussion regarding how the Judges order should read, and that discussion evidenced far more than a simple earwigging. Simply put, the evidence established that Petitioner knew about the bribe, was not surprised, and took no affirmative act to withdraw from the conspiracy. Further, Petitioner is criminally responsible for the acts of his co-conspirators, that is the payment of an actual bribe. That bribe was both foreseeable and in furtherance of the conspiracy. ARGUMENT I. Petitioner has not established and cannot establish his actual innocence of the charges contained within the Information to which he pled guilty. Relying on United States v. Skilling, 130 S. Ct. 2896 (2010), Petitioner alleges that the Court erred in finding that there was a sufficient factual basis establishing his guilt, that is, the Court erred in finding that knowledge of a bribe is immaterial to charges involving a deprivation of honest services. Petitioner procedurally defaulted this claim by failing to pursue a direct appeal. Therefore, he can only avail himself of Skilling if he can prove his actual innocence in accordance with United States v. Bousley, 523 U.S. 614, 624 (1998). Petitioner has failed to establish his actual innocence of the charge to which he pled and the remaining charges of the indictment. Petitioners burden is substantial and one that he has not and cannot meet. Govt. Motion to Dismiss, p.2. The United States Supreme Court clearly established Petitioners burden in United States v. Bousley, 523 U.S. 614, 624 (1998).4 Petitioner must prove that, despite a presumption of guilt, it is more likely than not that no reasonable juror would find him guilty of
Petitioner filed an additional bench memorandum asking this Court to overrule the United States Supreme Court because in his view Bousley does not make sense. Petitioners logic fails because there are other interests at stake beyond those of defendants who think they are innocent. The government has a strong interest and a duty to prevent defendants, who are otherwise guilty of more serious, foregone charges, from getting a free pass because of an unexpected change in the law, particularly those who pled guilty to misprision of a felony. As a result, the Courts ruling made perfect sense in limiting relief to only those few defendants who can clearly prove that they are actually, factually innocent of all charges.
misprision of a felony, as well as the charges in the Indictment. See Govt. Motion to Dismiss, p.2 (citing Bosley v. Cain, 409 F.3d 657, 664 (5th Cir. 2005).5 Petitioner contends that knowledge alone is not enough. See e.g. Petitioners Response, p.23. However, the only element of Petitioners misprision of a felony conviction that is even disputed at this point is knowledge and nothing more. Title 18, United States Code, Section 4, Misprision of a Felony, requires four elements: (1) that a federal felony was committed; (2) that Petitioner had knowledge of the commission of a felony; (3) that Petitioner failed to notify an authority as soon as possible; and (4) that Petitioner did an affirmative act, as charged, to conceal the crime. See 5th Cir. Pattern Jury Instruction 2.08. There is no question that a federal felony was committed in this case; in fact, there is no dispute that a federal felony was committed in this case that remains valid despite Skilling. Petitioners failure to immediately notify an authority is undisputed, and the affirmative act of concealment element has been admitted in the Factual Basis, procedurally-defaulted by Petitioner and ruled upon in the Courts Summary Judgment Opinion. See D.E. 371, p.14-23. As a result, the only element that can even be possibly disputed in this 2255 proceeding, as it relates to Petitioners actual innocence of misprision, is knowledge. It is Petitioners burden and he has wholly failed to prove that it is more likely than not that no reasonable juror would find that he had knowledge of a felony. The current record provides two separate bases to support Petitioners knowledge of a felony. First, the evidence admitted at the evidentiary hearing, in addition to the Factual Basis,
Petitioner makes several negative references to the governments failure to call a witness, as if that should prejudice the government in some way. See Petitioners Response, p.10 and p.55 First, the government can and did present evidence through cross examination that proved Petitioner did know about the bribe, there was no ineffective assistance of counsel and he did not rely on the fully aware comment when pleading guilty. Second, this Court was entitled to end the evidentiary hearing at any time and chose to end the hearing after Petitioner rested his case. The government would merely point out that it should not be prejudiced by the fact that it was not permitted to call a witness.
supports a money/property wire fraud scheme to defraud Johnny Jones which is immune from Skilling regardless of whether Petitioner knew about the bribe payments to Judge Lackey. Second, the record demonstrates that Petitioner did not prove that he had no knowledge of the bribe to Judge Lackey6 and, thus, Petitioner did not prove that he had no knowledge of an honest services fraud that remains valid after Skilling. Petitioner fell woefully short of proving his actual innocence of misprision of a felony and, as a result, he may not avail himself of the Skilling decision as a basis for relief. However, even if the Court did apply Skilling to Petitioners Information along with the Factual Basis and the elements of the offense, it would amount to harmless error because it would not cause a substantial or injurious effect on the Courts determination that there was a factual basis to support Petitioners plea. See Brecht v. Abrahmson, 507 U.S. 619, 638 (1993).7 A. Petitioner Did Not Prove that He is Actually Innocent of Misprision of a Valid, Money/Property Scheme to Defraud Jones. After limiting the scope of honest services fraud in Skilling, the United States Supreme Court remanded the case back to the Fifth Circuit who conducted a harmless error analysis See United States v. Skilling, ___ F.3d ___, 2011 WL 129085, *1 (5th Cir. 2011).8 The Court found that any error regarding the honest services fraud was harmless beyond a reasonable doubt as the Indictment contained valid money/property fraud charges. The same is true in the instant matter. In the present case, the Court found a set of facts based on the Factual Basis provided by
Tim Balduccis testimony along with the November 1st tape actually proved that he did know about the bribe. As a result, Petitioners complaints about the Bousley burden of proof are irrelevant. In fact, even if this case were on direct appeal, any Skilling error in the plea would be harmless beyond a reasonable doubt just as it was in the Skilling case itself because there is a valid, alternative theory of guilt contained in the Information and Factual Basis. The government provided the Court with extensive case citations to support the application of harmless error analysis in a Skilling case with the most obvious being the actual Skilling case itself. See Govt. Motion to Dismiss, pp. 24-30.
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the government and admitted by Petitioner and then applied the elements of the offense to the Factual Basis in determining that there was a factual basis for this defendant to plead guilty to this charge. See Change of Plea Hearing Tr., p.13, Pet. Ex. 90. The bottom line of the scheme or artifice to defraud had the inevitable result of effecting monetary or property losses and harmless error should apply even if Petitioners Information only charged an honest services fraud crime that is now invalid due to Skilling. See United States v. Asher, 854 F.2d 1483, 1494 (3d Cir. 1988) and Govt. Motion to Dismiss, p.26-29. The bottom line of the scheme to defraud described in the Factual Basis is that if it had not been discovered by the government it would have had an inevitable effect on the amount that Jones would have been able to collect on his claim against Scruggs, et al. The Information and Factual Basis establish a valid money/property scheme to defraud Jones. Therefore, no knowledge of the bribe is required. The evidence establishes Petitioners knowledge of the scheme and the other elements of misprision. Therefore, he has not and cannot establish his actual innocence of that scheme. Skilling is inapplicable. However, even if there was error, that error was harmless. Additionally, Petitioners argument is procedurally barred and time barred. Petitioner cannot challenge his admission to the facts contained in the Factual Basis of his guilty plea. Petitioner admits as much on the last page of his lengthy response, David Zachary Scruggs does not come to this Court attempting to recant anything he stated to the Court or that was contained in the Factual Basis. Petitioners Response, p. 74. The Factual Basis provides a baseline of proof from which to begin; however, the government is not limited to the Factual Basis alone in refuting Petitioners claim of actual innocence. See Bousley, 523 U.S. at 624.
Case 3:07-cr-00192-NBB -SAA Document 392 The Factual Basis provides the following admissions: !
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Petitioner participated in a meeting at the Scruggs Law Firm in March 2007 in which it was decided that because of his close relationship with Judge Lackey, Tim Balducci would speak to the judge in an ex parte manner and ask him to rule in favor of the defendants. (p.1) (emphasis added) Petitioner was aware that Balducci had not made an official entry of appearance on behalf of the Scruggs Law Firm to represent them in the matter. (p.1) Shortly after the March meeting, Balducci met with Judge Lackey and discussed the Jones v. Scruggs lawsuit. (p.1) On October 18, 2007, Judge Lackey provided Balducci with a signed order ruling in favor of the defendants. (p.2) Also on October 18, 2007, Balducci delivered the signed order to Petitioner and at that time, Petitioner was aware that the order would send the Jones v. Scruggs matter to arbitration, and he was aware that the plaintiffs were unaware of both Balduccis involvement and that Judge Lackeys ruling was based, in part, on something other than the merits of the lawsuit; that is, Balduccis personal relationship with Judge Lackey. (p.2) (emphasis added) In addition to the effect of Balduccis actions on the plaintiffs, Petitioner was also aware that such an act deprived the State of Mississippi of its intangible right to the honest services of Judge Henry Lackey... (p.2) (emphasis added) On November 1, 2007, Tim Balducci met with Petitioner and Sid Backstrom to report on the status of his ex parte attempts to obtain an arbitration order from Judge Lackey. Petitioner examined an updated order for arbitration and discussed its contents with Tim Balducci and Sid Backstrom. (p.2) On November 5, 2007, an e-mail was sent via wire transmission in interstate commerce related to the corrupt order sending the case to arbitration. (p.3)
Petitioner contends he pleaded to failing to report Mr. Balduccis earwigging of Judge Lackey not bribery but earwigging, (D.E. 303, p. 12) and an attempt to influence Judge Lackey by earwigging is not a violation of that statute, (Id., p. 8) nor a felony cognizable by courts of the United States (Id., p. 12). In reality, Petitioner pled guilty to an Information with a supporting Factual Basis, and the Information does not allege misprision of an earwigging but misprision of a felony. See Information, Pet. Ex. 88. That felony is then described in the Factual Basis. The admissions contained in the Factual Basis clearly describe a scheme to defraud Jones (plaintiffs) and a scheme to deprive the State of Mississippi of the honest services of Judge Lackey. The Factual Basis states that Petitioner had knowledge of two crimes:
(1) that Tim Balduccis covert, ex parte influence caused Judge Lackey to rule against the interest of Johnny Jones (plaintiffs) and in favor of the Scruggs Law Firm (defendants) based on something other than the merits; and (2) that Tim Balduccis actions also deprived the State of Mississippi of the honest services of Judge Lackey. The Factual Basis supports a wire fraud conviction standing on its own; however, the Court may also consider the evidence offered at the May 23-25, 2011 hearing (hereinafter evidentiary hearing). As the Court has already noted, the government is not limited to the existing record to rebut any showing Petitioner might make. Memorandum Opinion, D.E. 371, p.7, citing Bousley, 523 U.S. at 624. The Factual Basis names the victims of the scheme to defraud as the plaintiffs in the Jones v. Scruggs litigation, i.e. Johnny Jones. The Factual Basis and the evidence offered at the evidentiary hearing do not have to establish that Petitioner schemed to defraud Jones, but simply that Petitioner misprisioned the scheme of Dickie Scruggs, Sid Backstrom, Tim Balducci, and/or Steve Patterson to defraud Jones. There is no doubt that Petitioners co-defendants executed a scheme to defraud Jones that involved an interstate wire and clearly, the Factual Basis establishes that Petitioner misprisioned their scheme to defraud.9 Tim Balducci testified that the Jones litigation was a fee dispute and that Jones contended that the Scruggs Katrina Group (SKG) owed him more money than SKG was willing to pay. Hearing Tr., Vol. I, p.129. To this day, Petitioner remains indifferent to the impact of his actions on Johnny Jones and continues to claim that Scruggs Law Firm got to determine Mr. Joness rights: nobody sought to deprive Jones of any money he was rightfully owed. Petitioners
Petitioner attempts to distinguish United States v. Dyer, 136 F.3d 417 (5th Cir. 1998) by comparing it to the Indictment. See Petitioners Response, p.15. However, Dyer involved a plea to an Information and the Courts analysis of the allegations in the Dyer Information are analogous to this Courts evaluation of Petitioners Information and accompanying Factual Basis. See Dyer, 136 F.3d at 424.
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Response, p. 17. Mr. Jones would have gotten exactly what he was owed: an order compelling arbitration. Id. at p.18, n.7. Petitioner and his co-defendants did not get to determine what Jones was rightfully owed. Jones had a right to have an impartial Court decide what he was rightfully owed based on the merits. The Scruggs Law Firm took that right away. Sid Backstrom and David Shelton testified that arbitration was no more than a foregone conclusion for the Jones litigation and Petitioner continues to assert that their view of the case is the only possible view of the case.10 See Hearing Tr. Vol. II, p.25-26 and Vol. III, p.12; and Petitioners Response, p.41. However, Jones clearly had a different opinion about his own rights. See Jones Motion to Stay Arbitration, Govt. Ex. 13, p.1 (Defendants have expressly waived their rights to arbitration....The law is clear.) He practically begged for arbitration before filing the lawsuit and the Scruggs team repeatedly ignored his requests. Id. at p.2-3. After months of dealing with Scruggs stonewalling, he filed a lawsuit. Id. Only after the lawsuit was filed did the Scruggs Law Firm decide they wanted arbitration where they were confident that at least some of Jones claims, in Sid Backstroms words, would get stuck where you cant do anything about it. (11/1/2007 Tape) Pet. Ex # 40, Tr., p.28. In order to remove any doubt about the direction of the Jones litigation and with no regard for Jones, the Scruggs Law Firm sent Tim Balducci to influence Judge Lackey and ensure that the Scruggs team got exactly what they wanted-even if it was based on something other than the merits. See Factual Basis, p.2; Hearing Tr., Vol. I, p.136.
Petitioner again cites Barrett v. Jones, 27 So.3d 363 (Miss. 2009), a Mississippi Supreme Court decision that arose from the Jones, et al v. Scruggs, et al litigation. Barrett v. Jones is an opinion about sanctions and whether the other defendants in the litigation should have been sanctioned as a result of the actions of the Scruggs Law Firms tampering with the Jones lawsuit. Barrett, 27 So.2d at 370-77. The Court does affirm the lower Courts earlier decision to compel arbitration, but the opinion certainly does not stand for the proposition that arbitration was a foregone conclusion in 2007. Id. at 376-77. Scruggs did not know for certain that the case would be sent to arbitration during the execution of the scheme.
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Tim Balducci testified that his actions were clearly intended to be harmful to Jones, I think that if I would have been successful in persuading Judge Lackey to do me that favor, it would have had an adverse affect on Mr. Jones, yes. Hearing Tr., Vol. I, p.132-33. Balducci also indicated that arbitration was a best case scenario for the Scruggs Law Firm. Hearing Tr., Vol. I, p.141. Jones and his legal team had no knowledge of Tim Balduccis covert meetings to corruptly influence Judge Lackey. Hearing Tr., Vol. I, p.142 and Factual Basis, p.2. Steve Patterson testified that Tim Balduccis relationship with Judge Lackey was special and like a father and a son. Hearing Tr., Vol. II, p.185 & 190. At the request of Petitioner and his co-defendants, Tim Balducci used his special, Father/Son relationship to attempt to corruptly influence Judge Lackey in a way that was clearly intended to harm Johnny Jones and enrich the Scruggs Law Firm. In addition, the Scruggs Law Firm hoped Judge Lackey understood that a group of multi-millionaire trial lawyers would be eternally grateful for his actions. Hearing Tr., Vol. I, p.143. Balducci did not bump into Judge Lackey and tell him that the Scruggs Law Firm were good guys. See Hearing Tr., Vol. II, p.23. Balducci was sent on a mission by the Scruggs team to use his special influence over Judge Lackey to derail the Jones litigation by obtaining a signed order, written specifically to both meet the needs of the Scruggs Law Firm and cause harm to Johnny Jones position in his multi-million dollar lawsuit against Scruggs, et al. The Factual Basis and the evidence presented at the evidentiary hearing support a valid conviction for misprision of a money/property wire fraud and as a result, Petitioners 2255 Petition fails before it even starts.11
The misprision of a money/property wire fraud described in the Factual Basis and further supported by the evidentiary hearing also renders Petitioners Bousley complaints as moot.
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Case 3:07-cr-00192-NBB -SAA Document 392 B.
Filed 06/17/11 Page 12 of 37
Petitioner Did Not Prove that He is Actually Innocent of Misprision of a Valid, post-Skilling Honest Services Fraud In order to be found guilty of misprision of honest services fraud post-Skilling, the
underlying honest services fraud must contain a bribe or kickback.12 In addition to a money/property wire fraud, there is absolutely no doubt that Tim Balducci, Richard Scruggs and the rest of Petitioners co-defendants committed an honest services wire fraud involving a bribe that remains valid post-Skilling. Petitioner has admitted that Richard Scruggs and Sid Backstrom pled guilty to an honest services fraud that included a bribe. Petitioners Response, p.4. Petitioner also admits that his Factual Basis alone supports misprision of a pre-Skilling scheme to deprive the State of Mississippi of the honest services of Judge Lackey. Petitioners Response, p.16. As a result, knowledge of the bribe plus the admissions contained in the Factual Basis is sufficient to support misprision of a valid honest services fraud. Since Petitioner failed to prove that he had no knowledge of the bribe, then he failed to prove that he had no knowledge of an honest services fraud that remains valid after Skilling. Petitioner must prove that despite a presumption of guilt and despite the fact that Petitioner has admitted that he knew basically everything about Tim Balduccis missions with Judge Lackey except the bribe payments, no reasonable juror would hear the testimony, listen to the tapes and find that he knew about the bribe. See Bosley v. Cain, 409 F.3d 657, 664 (5th Cir. 2005). It is not enough that he might have convinced one juror, he must prove that it is more likely than not that no reasonable juror would find that he knew about the bribe payments. Id.
Skilling, 130 S.Ct. at 2928. It is worth noting here that Skilling was concerned with honest services fraud charges without a real victim, i.e. cases in which two, undeceived, parties are enriched and the public, as a deceived third party, loses nothing. See Skilling, at 2926. (describing the hypothetical example of a mayor awarding a fair market value contract based on a bribe). Clearly, this case involved a victim in Johnny Jones who was deceived and who faced the threat of significant monetary loss. As a result, this case does not lie at the heart of the Skilling Courts stated concerns in limiting the scope of honest services fraud.
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Case 3:07-cr-00192-NBB -SAA Document 392 He has failed.
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The credible evidence proves that Petitioner did know about the bribe payments even prior to November 1, 2007. On direct examination, Tim Balducci testified that based on his conversations with Sid Backstrom in September 2007 his understanding at that period of time was, they had all discussed - - [Richard Scruggs, Zach Scruggs and Sid Backstrom] all knew at that point, when they said that I would be covered, that they all understood and knew that it was going to cost $40,000; and they agreed to reimburse me for it. Hearing Tr. Vol. I, p. 73-74. Balducci also testified that the Scruggs Law Firms $40,000 payment to him was to obtain the corrupt arbitration order and Sid Backstrom and Steve Patterson confirmed that the $40,000 payment Balducci was in return for his ex parte mission with Judge Lackey. Hearing Tr., Vol. I, p.84; Vol. II, p.51; and Vol. III, p.219. Petitioners Factual Basis explains that on October 18, 2007, when Tim Balducci gave Petitioner a package, Petitioner knew that Tim Balducci was dropping off a signed arbitration order and that Balducci had obtained the order through covert, ex parte contact with Judge Lackey. Factual Basis, p.2. With that context in mind, Tim Balducci testified that Petitioner received the order from him on October 18, 2007, at the Scruggs Law Firm and applauded him for accomplishing his mission with Judge Lackey by saying, Youre a good friend; youve done a good job. Hearing Tr., Vol. I, p.94. At that same meeting, Tim Balducci picked up an envelope containing a $40,000 check from the Scruggs Law Firm that was a reimbursement for the $40,000 bribe paid to Judge Lackey. Id. After the October 18, 2007, meeting, Balducci and Steve Patterson spoke on a recorded telephone conversation and when Patterson asked if Balducci left the order on Richard Scruggs desk, Balducci responded, I did better than that, I left it with Zach. Govt. Ex. 8(a), Tr. p.2. Tim Balducci also testified that the Scruggs Law Firm used a bogus voir dire assignment to cover its
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payment of $40,000 as reimbursement to Balducci for his bribe payments to Judge Lackey. Hearing Tr., Vol. I, p.94-95.13 The November 1, 2007 Tape Recorded Conversation between Petitioner, Balducci and Backstrom: Z Scruggs: It could be...(UI)14 Balducci: God only knows. (pause) Um, the other piece of this puzzle I hadn't told you yet is uh, get it [the Order] how you want it because I've got to uh, I've gotta go back for another delivery of uh, another bushel of sweet potatoes down there. So. Because of all of this that has come up. Backstrom: Mm-hmm. Balducci: So get it right. Get it how you want it cause were payin for it to get it done right. (11/1/07 Tape) Pet. Ex. 40, Tr., p.30 (emphasis added) The "sweet potatoes" and "we're payin for it" statements are key pieces of evidence on the issue of Petitioners knowledge of the bribery payments to influence Judge Lackey. Tim Balducci did not blurt out these comments as a part of a random conversation, these words were the culmination of a detailed conversation covering pages of transcript in which Balducci was reporting back to Sid Backstrom and Petitioner on the status of his mission to obtain an arbitration order from Judge Lackey. (11/1/07 Tape) Pet. Ex. 40, Tr., pp.19-30. Petitioner would like for the Court to ignore the context of this conversation and ignore that Petitioner admits,
Steve Patterson was clear that the $40,000 payment was a reimbursement for the bribe payment to Judge Lackey despite his perception that the Scruggs Law Firm expected Tim Balducci to do some work. Hearing Tr., Vol. II, p.193-195 & 219. Sid Backstrom testified that the Scruggs Law Firm had big team and did not need Balducci to do the actual voir dire work. Hearing Tr., Vol. II, p.50. Backstrom also admitted on cross-examination that he used the term jury research as code for Tim Balduccis ex parte mission to acquire an arbitration order from Judge Lackey in favor of the Scruggs Law Firm and that the $40,000 payment was in return for Tim Balduccis influence over Judge Lackey. Hearing Tr., Vol. II, p.85 and p.51. Petitioner objected to editorial comments on the transcript that reflect the obvious sounds of doors opening and closing, yet Petitioner has inserted words onto the tape that simply do not exist. On at least three occasions, Petitioner alleges, with no basis in fact, that this unintelligible portion of the tape actually includes the phrase, It could be Trent [Lott] or Tricia [Lott]. See Petitioners Response, p.28 n.17; p.33; p.34. The missed call is obviously from a female and it is simply impossible to listen to the tape and draw the conclusion that Petitioner missed a call from then United States Senator Trent Lott. As Petitioner ironically notes, This Court instead must resolve these ultimate questions for itself. Petitioners Response, p.34.
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through the Factual Basis, that he knew all about Tim Balduccis covert meetings with Judge Lackey and the signed arbitration order ruling in favor of the Scruggs Law Firm based on something other than the merits. In addition, Tim Balducci testified that when he said were payin for it it was his understanding that Petitioner already knew about the $40,000 bribe to Judge Lackey and the Scruggs Law Firms subsequent reimbursement. See Hearing Tr., Vol. I, p.73-74. Tim Balducci testified about the code terms used as follows: [Y]ou're suggesting that I was speaking in code, and that potatoes could have meant orders. And I 'm just suggesting to you that if you listen in context to the tape, that I said I 've got to take another load of sweet potatoes back to the judge; and that I don' t think it would be reasonable for someone to interpret that I was saying I 've got to take another load of orders to him. Hearing Tr., Vol. I, p.116.
[I]f you think that there' s some ambiguity about what I was talking about with the sweet potatoes, I'm fairly certain it was cleared up in the next sentence when I said that we were paying for it. So I think that they would have to reasonably interrupt that that meant money at that point. Hearing Tr., Vol. I, p.117-118. (interrupt is clearly intended to mean interpret) As Balducci testified at the hearing, any ambiguity about the sweet potatoes statement was resolved by his next statement about getting it right because "we're payin for it." Go back for "another delivery" of "sweet potatoes" indicates a previous delivery of "sweet potatoes." "Because" indicates that the delivery of "sweet potatoes" is linked to "it."15 In the context of the previous discussion among Petitioner, Sid Backstrom and Tim Balducci about the order, the "it" in the sweet potatoes statement obviously refers to the order that Petitioner,
In his assertion that the words were payin for it could mean a gratuity paid at some point in the future instead of a bribe, Petitioner ignores the previous sentence which indicates that Balducci has already made a payment and has to go back and make another payment. See Petitioners Response, p.41. In addition to Tim Balducci, Steve Patterson clearly described the $40,000 payment to Judge Lackey as a bribe I can tell you that, factually, [Judge Lackey] had a quid pro quo when he asked for the money. Hearing Tr., Vol. II, p.216.
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Backstrom and Balducci are discussing. It would be unreasonable to believe that the participants in the conversation would think that Balducci was talking about making a delivery of actual "sweet potatoes." Instead, it would be reasonable to believe that he used "sweet potatoes" for a sensitive term or word, one that they did not want to say explicitly. It's unlikely that those involved in bribery, particularly lawyers, would say something like, "I've gotta make another delivery of bribe money" or "I've gotta make another bribe payment." In the context of the discussion among Petitioner, Backstrom and Balducci about the order, and in light of the March plan to corruptly influence Judge Lackey, a reasonable interpretation of the combined statements would be: "I have previously delivered money to Judge Lackey and I have to make another delivery of money to Judge Lackey for getting the order the exactly the way you want it, so get it how you want it." Petitioner has repeatedly made reference to an 8-second pause in the conversation after Balducci makes the statement God only knows as evidence that he was leaving the room, distracted, or in the process of disengaging from the conversation. Balduccis testimony clearly refutes that assertion: Q. A. Q. A. Do you know what happened during that eight seconds? Yes. What? Zach and Sid went back to reviewing the order. Hearing Tr., Vol. I, p.119
Sid Backstrom could not refute that testimony simply stating I dont recall him doing that, could have been, but I dont recall and I dont recall that happening. Hearing Tr., Vol. II, p.60 (emphasis added) and p.63.16
Backstrom did testify that he thought Petitioner attempted to read the order at some point in the conversation. Hearing Tr., Vol. II, p.60.
16
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The evidence clearly established that Petitioner, Backstrom and Balducci were in the room when those fateful words were spoken. The clear sounds of a door opening and closing on the tape support Balduccis testimony. The door in Backstroms office was a heavy, heavy door17 and it makes an unmistakable sound on the tape. The tape clearly reveals that the door opens as Ashley Young interrupts and then closes after Petitioner tells Mrs. Young to take a message. See Hearing Tr., Vol. II, p.130-131. Petitioner is obviously still in the room after Mrs. Young leaves and the door closes because he says thanks as the door closes and then continues I dont wanna answer a Tracy Lott who I dont know anything about by off chances. (11/1/07 Tape) Pet. Ex. 40, Tr., p. 29. The sweet potatoes and were payin for it comments follow and then Backstrom begins speaking again.18 The next sound of a door opening comes after Backstrom says For the reasons set forth above all matters in this cause and the sound of a door closing comes after Sid Backstrom says That, you know, thats good enough to me. I wouldnt change anything. (11/1/07 Tape) Pet. Ex. 40, Tr., p.30. As a result, the tape supports Tim Balduccis testimony that Petitioner was still in the room and still engaged in the conversation when he made the sweet potatoes and were payin for it comments. A reasonable juror would listen to the tape, find Balducci credible and conclude that Petitioner was in the room and heard the comments. Petitioner has failed to prove his actual innocence. Three people were in Sid Backstroms office when the words another bushel of sweet potatoes and were payin for it were uttered. Only two of them testified. One, Balducci, was certain that he remembered the events of November 1, 2007 and for good reason, as it was a day that changed his life forever. Hearing Tr., Vol. I, p.105. The other, Backstrom, was certain that
17
Sid Backstrom describing the doors of his office. Hearing Tr., Vol. II, p.62.
Petitioner did not respond. He didnt say, Payin for it? W hat are yall talking about? His lack of surprise and failure to respond is evidence that he had prior knowledge of the bribe.
18
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he could not remember what happened-he could only interpret what he felt the tape recording indicated. Hearing Tr., Vol. II, p.99-101. Speculative arguments based on the relative credibility of witnesses do not meet the Bousley standard for actual innocence. See Bosley, 409 F.3d at 665. In Bosley, the Court noted that the evidence amounted to a classic swearing match between witnesses and that the defendant failed to provide reliable evidence such as exculpatory scientific evidence, trustworthy eyewitness accounts, or critical physical evidence. Id. (emphasis added). Petitioner could not even present the Court with a swearing match in light of Tim Balduccis certain memory and Sid Backstroms certainty that he could not remember. The foundation of Petitioners argument regarding his knowledge of the bribe payments is that the witnesses that he perceived as favorable to him were more credible than the witnesses that he perceived were not favorable to him. Petitioner would have the Court rule that in picking between the testimony of convicted felons, every reasonable juror would side with his convicted felons and disagree with the governments convicted felon even after hearing the November 1st tape. However, if one reasonable juror believed Tim Balducci and the corroboration of the November 1st tape, then that juror would find that Petitioner knew about the bribe payments to Judge Lackey and consequently knew about an honest services fraud that remains valid after Skilling. As a result, to rule in favor of Petitioner, the Court would have to find that it is more likely than not that every reasonable juror on a jury would disregard Tim Balduccis testimony as unreliable and ignore the clear sounds of doors opening and closing on the November 1st tape that support Balduccis testimony. Petitioner indicates that several witnesses testified contrary to Tim Balducci regarding whether Petitioner heard or understood the sweet potatoes and were payin for it comments.
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Petitioners Response, p.33 (given the tape recording and several contrary witnesses, any reasonable juror would have reasonable doubt whether Petitioner heard or understood those comments.) (emphasis added). Several implies at least more than two.19 Petitioner has apparently mistaken one witness who couldnt remember what happened as several witnesses who testified contrary to Balducci as to what happened behind closed doors in Backstroms office on November 1, 2007. On direct examination, Petitioners counsel asked Sid Backstrom the critical question as his testimony relates to Petitioners knowledge of the bribe: Was Zach Scruggs in the room when Tim Balducci made the sweet potatoes and were payin for it comments? The caution in Backstroms carefully worded answer was obvious: Based on hearing that on the tape, I feel like he wasnt because he never said anything, never responded to that. Hearing Tr., Vol. II, p. 64 (emphasis added) The November 1st tape did not refresh Backstroms memory as Petitioner suggests. See Petitioners Response, p.35, n.25. In fact, Petitioners counsel did not even present Backstrom with the November 1st tape or the transcript on direct examination to give him an opportunity to have his memory refreshed. See Hearing Tr., Vol. II, p.7-66. When the government eventually confronted Backstrom with the November 1st tape on cross-examination, he did not say Oh, now I remember what happened, he simply offered an interpretation of the tape and maintained that he could not recall the events in his office based on his own, independent recollection: Q. ...If you dont recall, you dont think so or whatever, tell us. But if thats - if youve got definite testimony one way or another, this is the time to do it. A. Based on my recollection of that alone, I dont know. (Hearing Tr., Vol. II, p.100) ****
19
According to Merriam-W ebster, several indicates an indefinite number, more than two and fewer than
many.
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Q. All right. And Im still a litle confused. You said Tim might have been saying that in response to Zach walking out, and Im still a little confused. I thought you said, before that - - and thats what Im trying to clear up. Basically, you dont recall for certain whether Zach was in the room or not? A. Thats right. Q. Would that be fair? A. Thats right. (Hearing Tr., Vol. II, p.101)
On cross-examination, Sid Backstrom falsely asserted that he thought Tim Balduccis voir dire assignment was related to actual voir dire preparation and was not code for his progress with the Judge Lackey arbitration order. Yet, when confronted with the his October 31, 2007 tape recorded conversation with Balducci, Backstrom stated the exact opposite in that he used the term jury research as code to refer to Balduccis ex parte mission to obtain an arbitration order from Judge Lackey. Compare the line of questioning regarding Backstroms taped phone conversation with Balducci on October 18, 2007: Q. ...Now, when he [Balducci] says Dick hired me for voir dire, gave me 40,000 for that, hes still talking in code, isnt he? I mean, you understand that hes talking in code, didnt you? A. No. There was an expectation he would do that work. (Hearing Tr., Vol. II, p.82.) With the line of questioning regarding Backstroms phone conversation with Balducci on October 31, 2007: Q. ...Now, you werent talking about jury research, were you? A. No. I was talking about the order Q. Right, the order from Judge Lackey A. Correct (Hearing Tr., Vol. II, p.86) In addition, Sid Backstroms denial that he knew about the bribe on November 1, 2007, and his assertion that even he did not know what were payin for it meant is inconsistent with the recorded telephone conversation he had with Balducci on November 13, 2007. Hearing Tr., 20
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Vol. II, p. 103. On the November 13, 2007 call, Balducci bluntly tells Backstrom that they have already paid Judge Lackey $50,000 for the arbitration order.20 (11/13/07 Tape), Tr., p.14. Backstrom does not react with the type of shock that would have indicated he is hearing those words for the first time. He does not say What are you talking about! or $50,000 have you lost your mind! A fair interpretation of the November 13, 2007, tape is that Backstrom had known about the bribe payments and was not surprised to hear Balducci describe money being paid to Judge Lackey. Backstroms failure to admit his knowledge of the bribe on November 1, 2007, is a sign of his limited credibility at the hearing. Petitioner bears the burden of proof and his first witness actually proved that his section 2255 petition fails. Petitioner did not offer any trustworthy eyewitness accounts at the evidentiary hearing that refuted the testimony of Tim Balducci who testified that Petitioner knew about the bribe payments to Judge Lackey. Although Petitioner offered no evidence of his personal impressions of anything, including the events of November 1, 2007, he makes the outrageous suggestion that he was looking at his Blackberry as he walked out of the office when Balducci made the were payin for it comment. Petitioners Response, p.33. This assertion of conjecture with no basis in evidence is one of many and is an attempt to mislead the Court. There was not a scintilla of evidence presented at the hearing that supports the assertion that Petitioner was distracted by a Blackberry in Backstroms office on November 1, 2007. Any attempt to suggest otherwise is totally unsupported by the evidence.
Sid Backstroms repeated references to they, meaning Richard Scruggs and the Petitioner, did not occur on the November 13th tape as suggested by Petitioner. See Petitioners Response, p.30, n.19. Those references appear on the November 1 st tape after Balducci asked Backstrom to explain what he meant by his comment the day before on the October 31st tape that Richard Scruggs was about to melt down. See Govt. Motion to Dismiss, p.17 and (11/1/07 Tape) Pet. Ex. 40, Tr., p.50-52.
20
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In addition to the incredible Blackberry claim, Petitioner repeatedly made assertions that only he could testify to. It is quite clear that Petitioner had no particular need to be in Backstrom and Balduccis discussion, but just happened to wander in the room.21 Petitioners Response, p.26, n.15. Petitioner will show clear evidence that Petitioner never even heard the remainder of the conversation between Mr. Balducci and Mr. Backstrom. Id. at p.27. Fact #3: Petitioner never heard or understood Mr. Balduccis comments... Id. at p.32 Petitioner was startled and his mind was on the move. Id. at p.33. Startled? Mind on the move? There is absolutely no evidence in the record to support these assertions. Petitioner also relies on his self-serving statement made after the conclusion of his change of plea.22 Petitioner made this statement after he pled guilty and it was not part of his plea colloquy. See David Z. Scruggs Plea Hearing Tr., p.15, Pet. Ex. 90. Petitioner did not [make] this fact a part of his change of plea23 since it was not part of his Factual Basis. When Petitioner made his statement, the Court had already accepted his guilty plea and was just before adjourning the hearing. See Id. Since Petitioner made the statement after he pled guilty and after the Court had accepted his plea, the statement is akin to a plea for leniency at a sentencing hearing and has nothing to do with the factual basis of his guilty plea. When Petitioner made this statement, he was not testifying under oath subject to cross-examination and it is no substitute for his own testimony at the evidentiary hearing. The other witnesses offered by Petitioner provided nothing to rebut Tim Balduccis
It is actually quite clear that Petitioner knew exactly why Balducci was in the office and knew exactly what Balducci and Backstrom were talking about just by being told it was the Judge Lackey deal. See Factual Basis and 11/1/07 Tape Tr., p.19. Statements made during the plea colloquy are given greater weight than ....unsupported, after-the-fact, self-serving revisions. United States v. Cothran, 302 F.3d 279, 284 (5 th Cir. 2002)
23 22
21
Petitioners Response, p.23 .
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testimony or the November 1st tape. Richard Scruggs has a proven affinity for tampering with judicial proceedings and his stipulated testimony is a failed attempt to exonerate his own son from criminal liability that has no credibility.24 See Hearing Tr., Vol. II, p.181. Ashley Young had a magical, but selective, memory of every detail of one particular day but could not remember even one of her college courses during the same time period and refused to simply admit that the November 1st tape contains the obvious sound of a door closing. Id. at p.115, 12223, & 127-30. Regardless, she did not testify to how long it took Petitioner to meet her in the hallway and she admitted that she had no idea what was being talked about in Sid Backstroms office. Id. at p.123 & 130-31. David Shelton offered nothing substantive in support of Petitioner, but did make one intriguing comment as it regards Petitioners claim that he was disinterested in what was going on behind closed doors on November 1, 2007: [Zach] didnt like doors closed in the office if he wasnt inside the door. Id. at Vol. III, p.14. Steve Patterson is a convicted felon with a history of ethical problems who has absolutely no way of knowing what happened in Sid Backstroms office on November 1, 2007.25 Hearing Tr., Vol. II, p.201. Pattersons testimony actually offers even more evidence that Petitioner was actively involved in this scheme from the beginning and that the payments to Tim Balducci were cover for a bribe.26 Petitioner had to prove that it is more likely than not that every reasonable juror would
The government did not suggest the stipulation and frankly, one would think that he would have done more to try and help his son-that he would have demanded to testify regardless of the consequences to himself. Patterson equated politics with corruption and characterized his detailed involvement in the Wilson/Delaughter bribery scheme as nothing more than one introduction and a few meetings. See Hearing Tr., Vol. II, pp.209-10 and compare p.204 with pp.205-209. Petitioner was not involved in actually preparing the voir dire (Vol. III, p.93-96) and the voir dire work was used as code to refer to Tim Balduccis criminal missions with Judge Lackey (Vol II, p.85). Patterson testified that Petitioner contacted him on at least one occasion looking for Tim Balducci and inquiring about his voir dire project. Vol. II, p.193-195. A reasonable juror would find that when Petitioner called Steve Patterson, prior to November 1, 2007, looking for Tim Balducci to ask him about the voir dire that he was actually using the known code word for the criminal scheme in this case.
26 25
24
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have found that he either did not hear another bushel of sweet potatoes and were payin for it or that he did not understand what were payin for it meant. A swearing match between Tim Balduccis certain memory and Sid Backstroms failure to remember is not a swearing match at all and is simply not enough to meet that burden. See Bosley, 409 F.3d at 665. Knowledge of a felony is the only element of misprision that Petitioner can possibly contest at this point and he did not establish that he had no knowledge of the bribe. As a result, he did not prove his actual innocence of misprision of a felony for deprivation of honest services. II. Petitioner Cannot and Did Not Prove His Actual Innocence of the Honest Services Fraud Charges in the Original Indictment The evidence offered by Petitioner fell woefully short of proving his actual innocence of misprision of a felony and the application of Skilling to Petitioners Information would amount to nothing more than harmless error. As a result, Petitioners actual innocence of the underlying charges in the Indictment is moot and the analysis unnecessary.27 In addition to Petitioners failure to meet his burden, there is ample evidence in the record that a reasonable juror would find Petitioner guilty of the honest services fraud charges in the original indictment.28 It is undisputed that a conspiracy to commit valid honest services fraud, as well as valid substantive offenses of honest services fraud actually occurred in this case. After Skilling, a scheme to deprive the State of Mississippi of the honest services of Judge Lackey can still be validly defined as a scheme to obtain an order from Judge Lackey based on something other than the merits. Skilling does not make the bribe the object of the conspiracy but simply requires that
Such a finding would also undermine Petitioners complaints regarding Bousley because the Bousley standard would have only been applied to the charge to which he pled guilty. The pertinent facts related to actual innocence of misprision of felony are basically the same as those facts related to the underlying charges in the Indictment and the government incorporates its previous analysis of the facts as fully set forth herein.
28
27
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the payment of a bribe be a part of the scheme, as it was in this case. See Skilling, 130 S.Ct. at 2928. The object of the conspiracy remains the same, i.e. Judge Lackey basing his ruling on something other than the merits. Petitioner ignores his admissions in the Factual Basis and attempts to posture himself in such a way that he could have done no more than have mere knowledge of the crimes in this case.29 See Petitioners Reply, p.23. In doing so, Petitioner confuses the object of the scheme (to deprive honest services) with an act in furtherance of the scheme (the bribe). Petitioners Factual Basis and the evidence produced at the evidentiary hearing show that Petitioner joined and actively participated in a scheme to obtain an order from Judge Lackey based on something other than the merits and it is undisputed that the payment of a bribe was part of the scheme.30 The Factual Basis, along with the testimony and the recorded conversations admitted at the evidentiary hearing, clearly shows that Petitioner had a position of authority in the framework of the conspiracy/criminal venture. It is clear that on November 1, 2007, Petitioner was in a position to provide Balducci with marching orders on how to proceed with the commission of a crime (the Judge Lackey deal). (11/1/07 Tape) Pet. Ex. 40, Tr. pp.19-30. In that conversation, Balducci explicitly discusses the bribe and seeks guidance from Petitioner as well as Backstrom on how they want him to execute the criminal scheme. Id. Later in the same conversation, Sid Backstrom offers more evidence of Petitioners authority when he describes having to explain to them and they (Richard Scruggs and Petitioner) why Balducci had not already succeeded in
As previously noted, Petitioners knowledge of the crimes alone is conclusive of his guilt of misprision of a felony, and the government in no way concedes that Petitioner did not know about the bribe prior to November 1, 2007. Even if he learned of the bribe for the first time on November 1, 2007 (which the government does not concede), Petitioner made no effort to withdraw from the conspiracy after that point. W alking out of a room is not evidence that he withdrew from the conspiracy.
30
29
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his criminal mission to obtain an arbitration order from Judge Lackey. Id. at p.50.31 Petitioner utterly failed to prove that he did not know about the bribe and, in fact, the evidence produced at the hearing actually proved that he did know about the bribe. However, even without knowledge of the bribe, Petitioner cannot overcome the two key points that are abundantly clear in this case: (1) Petitioner joined and participated in a conspiracy to obtain an order from Judge Lackey based on something other than the merits thereby depriving the State of Mississippi of the honest services of Judge Lackey, and (2) the payment of a bribe to Judge Lackey was a part of and in furtherance of that conspiracy. It is well-settled that a co-conspirator does not have to know every detail of a conspiracy in order to be found guilty of that conspiracy. One may become a member of a conspiracy without knowing all the details of the unlawful scheme or the identities of all the other alleged conspirators. If a defendant understands the unlawful nature of a plan or scheme and knowingly and intentionally joins in that plan or scheme on one occasion, that is sufficient to convict him of conspiracy...even though the defendant played only a minor part. 5th Cir. Pattern Instruction 2.20.
A person may be guilty as a co-conspirator even if he only plays a minor role and he need not know all the details of the unlawful enterprise or know the exact number or identity of all the co-conspirators, so long as he knowingly participates in some fashion in the larger objectives of the conspiracy. United States v. Westbrook, 119 F.3d 1176, 1189 (5th Cir. 1997) (emphasis added) The larger objective of this conspiracy was to obtain an arbitration order from Judge Lackey based on something other than the merits. Petitioner played an active role in accomplishing that larger objective and engaged in a recorded conversation that explicitly described the payment of a bribe to Judge Lackey. Petitioner willfully joined a scheme to
Taken in context, Sid Backstroms comments about they and them is a response to Balduccis question about what Backstrom meant on the phone the day before when he said Richard Scruggs was about to melt down. As a result, this conversation is evidence that Richard Scruggs and Petitioner were anxious about the Lackey deal and questioning Sid Backstrom about the Lackey deal prior to October 31, 2007.
31
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deprive the State of Mississippi of the honest services of Judge Lackey and that scheme included a bribe. As a result, he is guilty of both conspiracy to commit honest services fraud and aiding and abetting the commission of substantive honest services fraud crimes and his guilt remains intact after Skilling. Petitioner did not prove his actual innocence of the honest services fraud charges in the Indictment. In addition, the Indictment charges a money/property wire fraud scheme, more explicitly than the Information, that is also wholly unaffected by Skilling. The government has already established the factual basis of the money/property wire fraud scheme in this case in proving that Petitioner pled guilty to misprision of a wire fraud scheme to defraud Jones. In addition to clearly establishing misprision, the Factual Basis along with the evidence presented at the hearing proves that Petitioner joined and participated in a scheme to defraud Jones. The objective of the scheme from its outset was to defeat Jones multi-million dollar claims against Scruggs, et al through corrupt means, either by obtaining an outright dismissal or ensuring that the case went straight to arbitration. Tim Balducci explained the original objective on cross-examination: Q: At some point in time, the strategy changes. And very shortly after that [the first meeting with Judge Lackey], the strategy changes. Isnt it a fact that Sid Backstrom and you had a conversation about that strategy change? A. Thats correct. Q. And what was the change in the strategy? A. Originally, I think that they had decided that they wanted to try to do something in Judge Lackeys court to end the lawsuit, either by a motion practice or some type of kill shot pleading. And I think that they abandoned that idea shortly after that and decided that they wanted to go straight to arbitration instead. And thats what Sid communicated to me. (Hearing Tr., Vol. I, p.136)
At the March meeting, Petitioner and his co-defendants launched a scheme to defeat Jones multi-million dollar lawsuit against them by corruptly using Tim Balduccis special influence over Judge Lackey to obtain a kill shot and that scheme morphed into an attempt to 27
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use Tim Balduccis special influence to send the case straight to arbitration. The Indictment does not charge a victimless crime. The charges in the Indictment involve a betrayed party who was put at risk of the deprivation of a significant amount of money. See Skilling, 130 S.Ct. at 2926 (describing an example of honest services fraud: While the offender profited, the betrayed party suffered no deprivation of money or property). In this case, the objective of the scheme was to subject Jones to the loss of millions of dollars through the use of corruption and behind the scenes tampering. The Indictment specifically references Title 18, United States Code, Section 1343 and describes a scheme to defraud with Jones as the obvious victim. As a result, the Indictment charged a valid money/property wire fraud scheme to defraud Jones that is immune from Skilling. Petitioner has not and cannot demonstrate his innocence. Because Skilling is inapplicable, his claims are also procedurally barred and time barred. III. Petitioners Ineffective Assistance Claim is Time-Barred and Clearly Fails on the Merits In his Response, Petitioner argues to the Court that his petition is not subject to a statute of limitations because his petition is actually a request for coram nobis relief. See Petitioners Reply, p.54. Petitioner filed a ...Motion to Vacate His Conviction Pursuant to 28 U.S.C. 2255. He did not file a request for coram nobis relief and Petitioner made a point to show that he was still under supervised release and in custody when he filed his section 2255 petition with this Court. See Petitioners Motion to Vacate Sentence, D.E. 303, p.1, 1st paragraph. A writ of coram nobis is only available to petitioners who are no longer in custody. Jimenez v. E.M. Trominski, 91 F.3d 767, 768 (5th Cir. 1996). This Court has already determined that the rules of 28 U.S.C. 2255 apply to this proceeding and the one year statute of limitations is applicable to
28
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the claims in the petition. See D.E. 371, p.2, n.1 and p.23.32 Petitioner is essentially arguing to the Court that the statute of limitations does not apply to his habeas petition because he waited longer to file it. Petitioner also suggests that his one timely 28 U.S.C. 2255 claim, based on Skilling, should allow him to bring any and all other claims that were otherwise time-barred.33 See Petitioners Response, pp.53-54. The Skilling decision provided Petitioner with an exception to the one-year statute of limitations in 28 U.S.C. 2255 on the Skilling issue alone. The Skilling decision did not afford Petitioner the opportunity to raise any and all issues regardless of timeliness. The Court has already recognized this obvious principle in its Summary Judgment Opinion. See D.E. 371, p.23 (applying one-year statute of limitations to Petitioners claim of the lack of an affirmative act of concealment). Petitioners Ineffective Assistance of Counsel claim is clearly barred by the one-year statute of limitations in 28 U.S.C. 2255 and even more clearly fails on the merits. Petitioners claim is based on the fact that Tony Farese simultaneously represented Joey Langston and Petitioner from December 10, 2007 until January 9, 2008. More specifically, Petitioner mistakenly alleges that Joey Langstons agreement to plead guilty in the Wilson/Delaughter matter created an insurmountable conflict with Tony Fareses representation of Petitioner in the
Coram nobis is also inapplicable in this case because Petitioner has not stated a valid coram nobis claim. Coram nobis would make Petitioners habeas petition even harder to prove. A writ of coram nobis will only issue to correct errors resulting in a complete miscarriage of justice and does not provide another attempt to litigate failed 28 U.S.C. 2255 claims. Jimenez, 91 F.3d at 768. In fact, the standard for coram nobis relief is more demanding than the cause and prejudice standard for relief under 28 U.S.C. 2255. Id. Petitioner cites a string of cases in his reply that deal with combinations of exhausted claims and pending claims in the same case. See Petitioners Reply, p.54, n.35. For example, Martin v. Jones, 969 F.Supp. 1058 (M.D. Tenn. 1997) involved a state habeas petitioner who had exhausted some of his claims but still had other claims pending in state court. The Court ruled that the state habeas petitioner could wait until all pending claims in state court were resolved and file one habeas petition in federal court. These cases do not apply to Petitioner at all because he did not pursue a direct appeal and has never had a pending claim.
33
32
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Jones/Lackey matter. However, Petitioners claim has absolutely no merit, given that he fired Tony Farese (because Langston pled guilty) on January 9, 2008 and pled guilty over two months later based on the advice of a team of highly experienced criminal attorneys that had no conflict of any kind. The government did not engage in secret plea negotiations with Joey Langston and Tony Farese in December 2007 and any assertion to the contrary is simply false. The evidentiary hearing provided the following evidence: On December 10, 2007, Tony Farese and Joey Langston had a brief meeting with the government. See Pet. Ex. 87 (Affidavit of David Sanders). At that point, the government had no indication that Petitioner had any knowledge of the Wilson/Delaughter matter. See Id. United States Judge David Sanders testified that the governments next contact with Tony Farese and Joey Langston came on January 4, 2008. Hearing Tr., Vol. III, p. 51. At that meeting, the government presented their case against Mr. Langston in the Wilson/Delaughter matter. Id. At the January 4 meeting, the government again indicated to Tony Farese and Joey Langston that the government had no evidence that Petitioner had any involvement the Wilson/Delaughter matter and Joey Langston said nothing to disabuse that notion. See Hearing Tr., Vol. III, p. 88-89. Joey Langston did not discuss Petitioners knowledge of the Wilson/Delaughter matter with the government at any time prior to his execution of a signed waiver on January 7, 2008, Langstons guilty plea on January 7, 2008, or Petitioners subsequent firing of Tony Farese on January 9, 2008. In fact, the first FBI 302 that includes any discussion of Petitioners knowledge of the Wilson/Delaughter matter describes an interview of Joey Langston that took place on February 22, 2008 following the motions day hearings on February 20 & 21, 2008. See Govt. Ex. 15. The one-year statute of limitations in 28 U.S.C. 2255 applies to claims of ineffective
30
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assistance of counsel. See Govt. Motion to Dismiss, p.43. Petitioner suggests that the government failed to prove this affirmative defense because the government did not call a witness.34 However, the testimony of Judge David Sanders clearly demonstrates that Petitioner knew the facts supporting his ineffective assistance claim before he entered his guilty plea and certainly before the date that his judgment of conviction became final. See 28 U.S.C. 2255(f)(4)(statute of limitations begins to run when facts supporting the [ineffective assistance of counsel claim]...could have been discovered through the exercise of due diligence.) The factual predicate of Petitioners baseless ineffective assistance claim is that Joey Langston agreed to plead guilty in the Wilson/Delaughter matter while Tony Farese represented Petitioner and then Langston subsequently became a potential 404(b) witness against Petitioner in the Jones/Lackey matter. Petitioner cannot and did not dispute that he knew these facts on the date on which his conviction became final.35 As a result, Petitioners claim is time-barred. Petitioner continues to fixate on Tom Dawsons book, The Kings of Tort. The Kings of Tort is not evidence, period. As the Court has already noted, excerpts from a book are not a substitute for sworn testimony at the evidentiary hearing. Petitioner has quoted from a book written on these issues...In resolving the issues raised by Petitioner, the court is going to consider evidence in open court from live witnesses in accordance with the Rules of Evidence. March 16, 2011 Order, D.E. 335. Petitioner continues to cite this book as gospel even after the evidentiary hearing. However, Tom Dawson was not only available to testify, he was under Petitioners subpoena and waiting in the witness room during the entire hearing. Petitioner did not call Mr. Dawson and
34
As mentioned earlier, the government cannot be prejudiced in any way for failing to call a witness.
Petitioners 3/19/08 Renewed 404(b) Motion makes essentially the same claim and clearly reveals that he knew the factual predicate of his baseless claim before he pled guilty, much less before his judgment became final. See Renewed 404(b) Motion, D.E. 176, p.8.
35
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made no effort to admit a single word of the Kings of Tort into evidence. The Kings of Tort is not evidence and the Court should disregard all references to it.36 Petitioner points out that the governments brief in support of its motion to dismiss ended abruptly and did not fully argue the requirements of Cuyler v. Sullivan, 446 U.S. 335, 350 (1980). See Petitioners Reply, p.48. Petitioner even goes so far as to suggest that the government cannot, however, bring itself to even argueas a matter of factthat the conflict in this case was merely speculative or potential. Id.37 On re-direct of his last witness, Petitioner morphed this argument into a new governmental misconduct for failure to do due diligence argument. Petitioner has apparently conceded that he cannot satisfy the standard set in Strickland v. Washington, 466 U.S. 668 (1984) and instead relies solely on the narrow line of cases under Cuyler. The Fifth Circuit has applied a two prong test in light of Cuyler. See Bostick v. Quarterman, 580 F.3d 303, 306-307 (5th Cir. 2009). First, Petitioner must establish an actual conflict of interest and second, Petitioner must establish that the conflict adversely affected his lawyers performance. Id. Petitioner cites United States v. Newell, 315 F.3d 510 (2002) in support of his conflict claim. Unlike the present case, Newell involved an actual conflict in which the same attorney
Petitioner also cites the affidavit of John Keker in his Reply. Although the Keker affidavit offers nothing to Petitioners case, the government had no reason to rebut the affidavit since it was not even mentioned at the hearing. The Keker affidavit offers absolutely nothing probative for the Court to consider and to the extent it does, Ken Coghlan and Ronald Michael submitted affidavits that refute Kekers claims. Unlike Keker, Coghlan and Michael were under subpoena and prepared to testify consistent with their affidavits. Petitioner fails to mention that his attorneys indicated to the government on Friday, May 20 th, before the hearing began on Monday, May 23rd , that the ineffective assistance issue was off the table. On Monday morning, Petitioners counsel began to waffle and indicated that the issue was off the table as long as the government did not bring it up on cross-examination. On the morning of W ednesday, May 25, the government began to get the sense that Petitioners counsel intended to bring the Farese Conflict issue up on appeal if Petitioner were to receive an adverse ruling from the Court. Finally, on re-direct of his last witness, Petitioners counsel put the issue of the Farese Conflict squarely on the table and then abruptly rested his case. Petitioner now feels it necessary to criticize the government as if the Motion to Dismiss does not spend enough time on the issue.
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represented two defendants in the same trial and basically argued to the jury that the innocence of one of his clients was based on the guilt of his other client. See Newell, 315 F.3d at 519. There is no actual conflict in this case. Joey Langston and Petitioner have never been defendants in the same case and Joey Langston has never testified against Petitioner. Petitioner must show something more than speculative or potential conflict,38 yet Petitioner has offered the Court no more than speculation and conjecture as to the possible impact of a potential 404(b) witness who never actually testified. Petitioner executed a waiver on January 7, 2008 and the dual representation ended on January 9, 2008, over two months before he pled guilty. There was no actual conflict and Cuyler does not apply. Petitioner continues to falsely claim that Joey Langstons Motion for Downward Departure is evidence that Langstons guilty plea caused harm to Petitioner. See Petitioners Reply, p.49. Petitioner selectively quotes the motion and omits Richard Scruggs and Sidney Backstroms names.39 Id. It is beyond dispute that Joey Langston was not going to testify against Sid Backstrom and that his guilty plea was not directly related to Backstrom in any way. Judge Sanders explained that Langstons guilty plea was a substantial factor in the plea of Richard Scruggs and Richard Scruggs guilty plea strengthened the governments position with all remaining defendants. Hearing Tr., Vol. III, p.53 (as a prosecutor working the case, it certainly helped matters significantly). Petitioner is quoting the motion out of context and suggesting that it says something that it just does not say. Petitioner also cannot establish that the alleged conflict adversely affected his lawyers
38
Bostick, 580 F.3d at 306, citing United States v. Culverhouse, 507 F.3d 888, 892 (5 th Cir. 2007).
Petitioner quotes the motion as it regards Langstons cooperation with the following passage: substantially contributed...to the plea of...Zach Scruggs. The full quote from the Motion for Downward Departure reads: substantially contributed to Dickie Scruggs subsequent plea of guilty as well as the pleas of Sidney Backstrom and Zach Scruggs (Scruggs I). See Pet. Ex. 92, Motion for Downward Departure.
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performance. After January 9, 2008, Tony Farese no longer represented Petitioner. Petitioner must show that the alleged conflict adversely affected his lawyers performance. See Bostick, 580 F.3d at 306-307. Petitioner has never alleged that his lawyers at the time of his plea had a conflict. After Petitioner fired Tony Farese, he received counsel from a team of qualified, experienced criminal defense attorneys for over two months before pleading guilty. The subsequent representation of Petitioners experienced legal team led to a very favorable offer to plead guilty to misprision of a felony with a recommendation of probation. At the time of his plea, the performance of his lawyers was wholly unaffected by Tony Fareses representation of Joey Langston. After three days of an evidentiary hearing, the best Petitioner can do is quote a book that is not evidence and cite an affidavit that was never mentioned at the hearing. Petitioner cannot cite real evidence because the evidence presented at the evidentiary hearing conclusively proves that his claim of the Farese Conflict/Ineffective Assistance is time-barred and fails on the merits. IV. Petitioners Alleged Government Misconduct Claim Fails
Judge Sanders uncontradicted testimony at the evidentiary hearing clearly showed that Petitioner was aware of the factual predicate of his baseless government misconduct claim at the time of his guilty plea and certainly on the date in which his judgment of conviction became final. He could have and did not raise the issue on appeal and has procedurally-defaulted the claim. He has also failed to comply with the one year statute of limitations contained at 28 U.S.C. 2255(f). See Govt. Motion to Dismiss, pp.30-36 The testimony of Judge David Sanders completely disposes of Petitioners claim that government misconduct rendered his plea involuntary. The uncontradicted evidence before this Court is that Petitioner did not rely on the governments fully aware comment when he pled
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We never got that cleared up? Ive already said we got it cleared up. You, me and Nathan or Nathan and me, we got it cleared up...I know that Zach didnt enter a guilty plea based at all on his fear of what Joey was going to - - that Joey would come in and say he knew everything about Scruggs II. Because I made that clear to either you or Nathan or both that that was not what Joey was going to testify to. Hearing Tr., Vol. III, p.90-91. Petitioner cannot overcome Judge Sanders testimony and he knows it. His only response is to claim that David Sanders, a Federal Magistrate Judge, intentionally misled this Court.40 Petitioner unabashedly accuses Judge Sanders of offering a convenient surprise to the government and providing self-serving testimony. See Petitioners Reply, p.66-67, n.42. Petitioners attack on Judge Sanders has no basis in evidence and is unacceptable. Nathan Garrett was the only other witness at the evidentiary hearing that could possibly contradict Judge Sanders testimony and he did the exact opposite, admitting that he would not disagree with Judge Sanders if Judge Sanders suggested that he explained the actual extent of Joey Langstons testimony prior to the date of his guilty plea. See Hearing Tr., Vol. II, p. 170-173. (I mean, I just dont have a personal recollection of it. I dont doubt Dave.) Over and over again, Petitioner has suggested to this Court that the governments response to his renewed 404(b) motion forced him to plead guilty.41 However, the uncontradicted evidence before this Court is that Petitioner had already agreed to the terms of his plea agreement before March 21, 2008 when the government filed its response. See Hearing Tr.,
Judge Sanders uncontradicted testimony also raises serious doubt as to whether Petitioner raised this issue in good-faith. Petitioner continues his relentless assertions of personal impressions unsupported by the evidence, for example:[Petitioner] was focused on Mr. Langstons testimony as a primary obstacle in any trial. Petitioners Response, p. 68. Nathan Garrett actually testified that he was focused on Petitioners plea and he was not focused on the 404(b) issue. See Hearing Tr. p. 141. (my focus and attention throughout this 404 and throughout all of this latter part of the case was on seeking to reach a plea resolution with the government. Thats where- - and perhaps particularly attributable to my lack of acute memory with regard to the 404. My focus was on that.).
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p.71 (Judge Sanders: we certainly had hammered out a deal prior to the date he entered the plea). Petitioner did not abruptly decide to plead guilty on the morning of March 21, 2008. Petitioner attempts to mislead the Court by claiming that he pled guilty the day after the government filed its response. See Petitioners Response, p.69 (Petitioner had to plead guilty, which he did the very next day). The governments response was filed on March 21, 2008, the same day that Petitioner entered his guilty plea. Petitioner wholly failed to prove that he relied on the fully aware statement when entering his guilty plea and in fact, Judge Sanders testimony proved the exact opposite, that Petitioner did not rely on the fully aware statement when pleading guilty. As a result, Petitioners claim for relief based on alleged government misconduct must fail. CONCLUSION Petitioner did not prove any grounds for relief in support of his 28 U.S.C. 2255 petition and his petition fails on numerous levels. For these reasons, the Petitioners Motion to Vacate His Conviction Pursuant to 28 U.S.C. 2255 should be denied. Respectfully submitted, JOHN MARSHALL ALEXANDER United States Attorney /s/ Clayton A. Dabbs By: CLAYTON A. DABBS Assistant United States Attorney Mississippi Bar No. 101537 /s/ William C. Lamar By: WILLIAM C. LAMAR Assistant United States Attorney Mississippi Bar No. 8479
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CERTIFICATE OF SERVICE We, CLAYTON A. DABBS, Assistant United States Attorney, and WILLIAM C. LAMAR, Assistant United States Attorney, hereby certify that we electronically filed the foregoing GOVERNMENTS MEMORANDUM OF LAW AND REPLY TO PETITIONERS RESPONSE IN OPPOSITION TO THE GOVERNMENTS MOTION TO DISMISS with the Clerk of the Court using the ECF system which sent notification of such filing to the following: Honorable David Lee Martin lm@mikemoorelawfirm.com Honorable Michael C. Moore mm@mikemoorelawfirm.com Honorable Christopher T. Robertson christopherrobertson@gmail.com Honorable Edward D. Robertson, Jr. chiprob@earthlink.net This the 17th day of June, 2011.
__/s/ Clayton A. Dabbs______________ CLAYTON A. DABBS Assistant United States Attorney
__/s/ William C. Lamar______________ WILLIAM C. LAMAR Assistant United States Attorney

Government Responds To Zach Scruggs Arguments To Undo Guilty Plea - 061811

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Government Responds To Zach Scruggs Arguments To Undo Guilty Plea - 061811

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Case 3:07-cr-00192-NBB -SAA Document 392 He has failed.

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Petitioners Response, p.23 .

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/s/ Clayton A. Dabbs____________ CLAYTON A. DABBS Assistant United States Attorney

/s/ William C. Lamar____________ WILLIAM C. LAMAR Assistant United States Attorney