The opinion of the court was delivered by: Debevoise, Senior District Judge
Two defense applications are pending before the Court. First, Defendant Leonard Pelullo moves for relief pursuant to Federal Rule of Civil Procedure 60(b) and (d) on the ground that the government misrepresented material facts to the Court of Appeals for the Third Circuit and to this Court. Second, Pelullo moves for relief pursuant to Rule 60(b) on the ground that the Supreme Court decision in United States v. Santos, 553 U.S. 507 (2008) established that his conviction on the indictment's money laundering counts was invalid, requiring that the judgment of conviction on all counts be set aside and a new trial ordered on the theft counts.
On December 9, 1994 a grand jury sitting in Newark, New Jersey returned a 54 count indictment against defendants Leonard Pelullo and Raul Corona.*fn1
Count 1 charged a two-part conspiracy. First, defendants and others were accused of conspiracy to embezzle approximately $4,176,000 belonging to the Compton Press Employees' Profit Sharing Retirement Plan (the "Retirement Plan") and belonging to the Compton Press Employees' Thrift Plan (the "Thrift Plan") contrary to 18 U.S.C. § 664. (The two plans will be referred to collectively as the "Employees Benefit Plans"). Second, defendants and others were accused of conspiring to commit money laundering offenses, namely, to conduct financial transactions that involved the proceeds of unlawful activity (the thefts from the Employees Benefit Plans) with the intent to promote the unlawful activity and knowing that the financial transactions were designed to conceal the nature and ownership of the proceeds of the unlawful activity contrary to 18 U.S.C. § 1956(a)(1).
Counts 2 through 12 each charged that the defendants embezzled an amount of money or assets of one or the other or both of the two Employees Benefit Plans. Counts 13-54 each charged that the defendants engaged in a specific transaction which constituted an act of money laundering.
The Indictment charged that Pelullo conspired to commit and committed three separate, multi-transaction embezzlements. First, he transferred a total of $1.15 million from various brokerage accounts maintained by the Employees Benefit Plans to Granada Investments, Inc. ($750,000), and to Paribas - an investment banking firm ($450,000)-to further his interest in a takeover of DWG Corp., as well as to pay personal expenses.
Second, he transferred $1,326 million from the Employees Benefit Plans accounts at various brokerage houses to pension accounts at a Florida bank. From there the funds were transferred to the trust account of Adorno, Zeder, a Miami law firm. Thereafter, Pelullo orchestrated numerous transfers out of the Plans' funds from the trust account, a significant portion of which was used to reimburse Pelullo and others for their investment in Away-to-Travel-South, Inc. ("ATTS"), a travel agency,*fn2 and the remainder of which was used to further the business interests and pay personal expenses of Pelullo and members of his family.
The third embezzlement arose from Pelullo's termination of an annuity contract owned by the Employees Benefit Plans and issued by the UNUM insurance company, resulting in a $330,000 liquidation charge. At the directions of Pelullo's subordinates, UNUM transferred the remaining proceeds of the annuity, $1.4 million, to a corporate account controlled by Pelullo. From there, Pelullo caused the transfer of those proceeds to the Adorno, Zeder trust account, and their ultimate expenditure on Pelullo's business and personal expenses. Among the business ventures that Pelullo sought to fund with Employees Benefit Plans funds included a deal involving Nursery Acquisition Corp., and the acquisition of National Media, an infomercial company which had $10 million in cash.
On November 8, 1996 a jury convicted Pelullo of all forty-four counts in the Indictment. The Court denied a series of post-verdict motions, see 961 F. Supp. 736 (D.N.J. 1997) (in which the trial evidence is discussed extensively), 971 F. Supp. 159 (D.N.J. 1997) and 5 F. Supp. 2d 285 (D.N.J. 1998). On December 8, 1997, the Court imposed a sentence of 210 months for each of the 41 money laundering counts, six months for the conspiracy and each of the embezzlement counts, all to be served concurrently with each other and with the sentence imposed on Pelullo for racketeering and wire fraud convictions in the Eastern District of Pennsylvania.
The Court of Appeals affirmed the Court's judgment on June 15, 1999, and rehearing en banc was denied on August 23, 1999. The Supreme Court denied Pelullo's petition for a writ of certiorari on January 10, 2000.
During the two and one-half years after the Court of Appeals affirmed Pelullo's conviction on June 15, 1999, United States v. Pelullo, 185 F. 3d 863 (3d Cir. 1999 (Table), (rehearing denied en banc August 23, 1999)), Pelullo filed a series of motions and a petition for relief pursuant to 28 U.S.C. § 2255.
In November, 1999 Pelullo filed a tri-partite motion for a new trial pursuant to Fed. R. Crim. P. 33. Each part developed one aspect of Pelullo's contention that newly discovered evidence disclosed that the government had suppressed and failed to disclose favorable evidence in violation of its obligations under Brady v. Maryland, 373 U.S. 83 (1963), and had elicited perjured testimony and argued from false evidence to the jury at his trial. The evidence that allegedly had not been disclosed came from a 2,400 square foot warehouse Pelullo maintained in Miami Florida, and from the Department of Labor's ("DOL") Pension and Welfare Benefits Administration ("PWBA").
The third part of the 1999 motion for a new trial relied primarily upon depositions and documents that Pelullo obtained from the DOL pursuant to an order of the court and documents obtained from the DOL pursuant to a Freedom of Information Act (FOIA) request. The depositions were of David Hellhake taken in a Florida bankruptcy matter, In re Ocean Properties of Delaware Inc., S. D. Fla. Case No. 90-11919 BRC-SM and of David Hellhake's father, George P. Hellhake, taken in the same matter. In addition Pelullo relied upon the newly discovered letter dated August 30, 1989 to Douglas Miller of Shearson Lehman authorizing the transfer of the Employees Benefit Plans' account at A.G. Edwards. The letter was signed by Coolidge Marqueen, one of Compton Press's former owners, as well as by Raul Corona (a former defendant) and David Hellhake. Further, Pelullo relied upon the newly produced report of Gus R. Lesnevich, an expert forensic document examiner who had examined seven of the original Granada Investment Inc. loan documents and concluded that the signatures of Andrew
N. Heine on each of these documents were genuine.
These documents, according to Pelullo, contradicted the government's contentions and the testimony of its witnesses i) concerning the relationship of David and George Hellhake to GH Enterprises, the role of GH Enterprises in the DWG transaction and George Hellhake's role in the ATTS transaction, ii) that Gerardi and Marqueen had not been aware of the transfer of Employees Benefit Plans' funds to acquire the DWG stock and iii) that Heine had not signed loan instruments in connection with the DWG stock acquisition.
In April, 2000, prior to argument on Pelullo's new trial motion, the court suggested that the government turn over to Pelullo the documents in the PWBA file, which the government agreed to do. In January 2001, Pelullo filed a petition for relief pursuant to 28 U.S.C. § 2255 asserting 1) the Court failed to provide the jury with specific unanimity instructions, 2) the Court misapplied the sentencing guidelines in that it sentenced Pelullo pursuant to U.S.S.G. § 2S1.1, which is applicable to money laundering, rather than the embezzlement, guidelines, 3) the Court improperly amended Pelullo's judgment of conviction to include forfeiture provisions, and 4) the government failed to present sufficient evidence to support the conviction for money laundering.*fn3
In its May 17, 2002 opinion the Court granted Pelullo's motion for a new trial based upon Brady violations. The Court denied Pelullo's petition for relief under § 2255 on the first and fourth grounds for relief, granting a certificate of appealability on the first ground. It did not address the second and third § 2255 grounds.
The court found no evidence that the government knowingly used false evidence, but held that the disclosures subsequent to trial of documents primarily from a Florida warehouse but also from the DOL's own files evidenced such a serious violation of the government's Brady obligations that Pelullo's motion for a new trial had to be granted on that ground alone. United States v. Pelullo, Civ. No. 01-124, Crim. No. 94-276, slip op. at 12-23 (D.N.J. May 17, 2002).
The government appealed the order granting the new trial. It argued that the warehouse documents were Pelullo's, that he was familiar with them and that he had full opportunity to review them. As to the DOL documents, the government urged that the PWBA was a civil arm of the DOL monitoring a separate civil law suit and thus was not part of the prosecution team responsible to search for and turn over to Pelullo material that might be considered Brady material.
In support of its contention that the PWBA was not part of the prosecution team the government in its Third Step Brief in the Court of Appeals (Pelullo Exh. 1) stated "the PWBA Officials who possessed the documents at issue were not members of the prosecution team in this case." In a Memorandum submitted in a subsequent proceeding (Pelullo Exh. 16), the government summarized its position before the Court of Appeals: "Rather, the government contended that the agents and employees of the DOL and PWBA who were part of the prosecution team were not involved in collecting civil lawsuit documents."
The Court of Appeals reversed this court's grant of Pelullo's motion for a new trial and remanded so that the court could address the motions that it had found unnecessary to decide in light of the fact that it anticipated a new trial, United States v. Pelullo, 399 F. 3d 197 (3d Cir. 2005).
With respect to the warehouse documents, the Court of Appeals held:
In sum, the following factors militate against a finding of suppression of the warehouse documents: (1) the massive amount of documents, which belonged to Pelullo; (2) the government's lack of knowledge as to the exculpatory nature of the material contained in the warehouse documents; (3) the defense knowledge of, and access to, the subject documents. The government's representations, the only factor weighing in favor of suppression do not, under the circumstances, negate Pelullo's duty to exercise reasonable diligence.
We hold that the District Court clearly erred in its findings of fact and that there was no suppression of the warehouse documents.
Turning to the PWBA documents, the Court of Appeals held: "Because we reject the District Court's conclusion that the PWBA should be considered part of the 'prosecution team' we conclude the government did not suppress the PWBA documents." Id.
The Court presented the factual question as follows:
Here, there is no question that certain DOL agents were integral members of the prosecution team. Pelullo argues that this compels the conclusion that the PWBA (as part of the DOL) was part of the prosecution team as well, thus extending the government's Brady obligations to information possessed by the PWBA. The government argues that the prosecution team should not be defined to include the entire DOL, a massive federal agency. The question presented then, is whether the PWBA officials who possessed the documents at issue were members of the "prosecution team" in this case.
The following quotations from the Court of Appeals's opinion demonstrate that it accepted the government's characterization of the PWBA's role:
While the United States Attorney's Office in New Jersey and agents from the Labor Racketeering Office of the DOL (which is responsible for enforcing violations of federal criminal law) were investigating Pelullo's actions with respect to the benefit plans, officials of the PWBA, a civil arm of the DOL, were monitoring a separate lawsuit, Gerardi, et al. v. Pelullo, et al., United States District of New Jersey Civ. No. 89-4069. That case, like this one, involved the conversion of benefit plan assets. The PWBA collected documents which had been exchanged in discovery between Pelullo and other litigants in that civil case.
The District Court also found that the government suppressed the PWBA documents, on the ground that the government's Brady obligations extended to the content of those files because "this material was in the files of the same agency, the DOL, that prepared the present case for trial." Because we reject the District Court's conclusion that the PWBA should be considered part of the "prosecution team," we conclude the government did not suppress the PWBA documents.
Id. at 216 Applying the general principles set forth in these cases - that the prosecution is only obligated to disclose information known to others acting on the government's behalf in a particular case - we conclude that the PWBA was not a member of the prosecution team. There is no indication that the prosecution and PWBA engaged in a joint investigation or otherwise shared labor and resources. Cf. United States v. Antone, 603 F. 2d 566, 569-70 (5th Cir. 1979) (holding that information possessed by state investigator should be imputed to federal prosecutor because "the two governments, state and federal, pooled their investigative energies [to prosecute the defendants'"). Nor is there any indication that the prosecution had any sort of control over the PWBA officials who were collecting documents. And Pelullo's arguments to the contrary notwithstanding, that other agents in the DOL participated in this investigation does not mean that the entire DOL is properly considered part of the prosecution team. Indeed, in Locascio, information was not attributable to the prosecution team, even though it was known to investigators drawn from the same agency as members of the prosecution team. Likewise here, the PWBA civil investigators who possessed the documents at issue played no role in this criminal case.
Id. at 216 Finally, the Court of Appeals noted that: even if the prosecutor is charged with knowledge, either actual or constructive of the PWBA documents, Pelullo's Brady claim would still fail if he could have obtained the information through the exercise of reasonable diligence. While the public nature of these documents, generated as they were during the course of two civil actions, suggests that Pelullo had sufficient access, to the documents to defeat his Brady claim, we need not reach that issue in light of our holding here. (Emphasis added).
The Court of Appeals also affirmed this Court's denial of collateral relief, holding that Pelullo's challenge to his jury instructions was procedurally barred. The Court of Appeals directed this Court to 1) reinstate Pelullo's judgment of conviction and sentence, 2) resolve the remaining § 2255 issues, and 3) give serious consideration to vacating its order releasing Pelullo on bail. The Supreme Court denied Pelullo's petition for certiorari on or about January 26, 2006.
In compliance with the mandate, on May 12, 2005 this Court entered an order reinstating the judgment of conviction. The Court also ordered that Pelullo's bail be revoked. On May 24, 2005 Pelullo filed an appeal with the Court of Appeals from the order reinstating his judgment of conviction and sentence, asserting, among other things, that this Court in connection with the sentence should have applied the Supreme Court's decision in United States v. Booker, 543 U.S. 220 (2005).
On November 1, 2005 the Court denied Pelullo's § 2255 claim that he was incorrectly sentenced pursuant to the money laundering guidelines rather than the embezzlement guidelines. The Court, however, granted Pelullo's § 2255 claim that the judgment of conviction had been improperly amended to include a forfeiture provision. The Court also rejected Pelullo's claim that he should be resentenced under Booker, finding that for retroactivity purposes, the judgment became final on January 10, 2006 when the Supreme Court denied certiorari from Pelullo's direct appeal. Further, this Court denied Pelullo's motion to amend his § 2255 petition to add a claim of ineffective assistance of counsel, finding that this claim was totally unrelated to any of his four § 2255 claims. The Court denied a certificate of appealability as to all claims.
Pelullo filed separate appeals from the Court's reinstatement of the judgment of sentence, and from the Court's denial of his § 2255 claims and of its denial of his motion to amend that petition.
The government filed a cross-appeal regarding the Court's decision that the judgment of conviction was improperly amended to include forfeiture.*fn4
On or about May 12, 2006, defendant Pelullo filed a Motion for Relief Pursuant to Federal Rule of Civil Procedure 60(b) in which he sought to vacate the Judgment of conviction reinstated by this Court on May 12, 2005. In particular, Pelullo contended that documents he received after May 12, 2005, pursuant to FOIA requests, demonstrated that the PWBA was an integral part of the "prosecution team." According to Pelullo, this cast doubt upon the basis for the Court of Appeals's March 8, 2005 decision that the four allegedly material PWBA documents he received post-trial were not "suppressed" under Brady. On July 28, 2006, Pelullo filed a Motion for Release on Bail pending Appeal and Resolution of his Rule 60(b) application.
In an order dated December 14, 2006, this Court held that the Rule 60(b) motion should be treated as a second and successive petition under 28 U.S.C. § 2255*fn5 , and as a result the Court lacked jurisdiction because Pelullo had neither requested nor received approval from the Court of Appeals to file such a petition. See 28 U.S.C. § 2255(h). In making its ruling, this Court noted that "the role of the DOL and PWBA agents was exactly what the Court of Appeals understood it to be: "there is no question that certain DOL agents were integral members of the prosecution team," "see 12/14/06 Opinion at 39, 2006 WL 3694590, at * 22, and "that the record does not establish that the government attorneys made misrepresentations to the Court of Appeals," see 12/14/06 opinion, at 41, 2006 WL 3694590, at *22.*fn6
This Court transferred the Rule 60(b) motion to the Court of Appeals to be treated as an application for leave to submit a second or successive petition. This Court also denied Pelullo's motion for bail. Pelullo thereafter filed a notice of appeal from this Court's December 14, 2006 order.
By letter dated August 2, 2007, Pelullo elected not to proceed with the transferred proceeding in the Court of Appeals. Accordingly, the Court of Appeals dismissed the transferred application for leave to submit a second or successive petition on June 1, 2007. On October 15, 2007, the Court of Appeals dismissed Pelullo's appeal of this court's December 14, 2006 order transferring his Rule 60(b) motion to the Court of Appeals for lack of jurisdiction. In particular, the Court of Appeals held that orders transferring motions found to be second or successive section 2255 motions to a Court of Appeals are not appealable. The Court of Appeals, however, dismissed Pelullo's appeal without prejudice to the defendant filing a new section 2244 application with the appellate court. Finally, the Court of Appeals affirmed this Court's denial of bail.
On or about March 29, 2007, Pelullo filed a motion asking this Court to rule upon claims asserted in his 1999 Rule 33 motion which the Court did not rule upon in 2002, for leave to supplement his motions with a claim of ineffective assistance of counsel, and for leave to supplement his Rule 33 motion with two allegedly newly discovered letters between Michael Rich, Esq., and government witness Fred Schwartz.
On or about January 4, 2008, Pelullo filed a motion pursuant to Fed. R. Civ. P. 60(b), in which he sought 1) to vacate this Court's January 7, 2004 opinion on remand denying his motion to expand the appellate record, 2) to vacate his judgment of conviction and sentence, 3) ...