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Schwartz v. Hollingsworth

United States District Court, D. New Jersey

September 26, 2018

STEVEN SCHWARTZ, Petitioner,
v.
J. HOLLINGSWORTH, Respondent.

          OPINION

          ROBERT B. KUGLER, U.S.D.J.

         I. INTRODUCTION

         Petitioner Steven Schwartz (“Petitioner”), is a federal prisoner currently incarcerated at FCI Schuylkill, Pennsylvania. He is proceeding pro se with a petition for a writ of habeas corpus challenging his convictions pursuant to 28 U.S.C. § 2241 and requests that the Court hold an evidentiary hearing as to his claims. For the reasons stated below, the Court will deny the petition.

         II. BACKGROUND

         This case arises from two related matters. First, in January of 2003, a grand jury returned an indictment, charging Petitioner with: conspiracy to commit bank fraud, wire fraud, and identity theft; wire fraud; bank fraud; identity theft; and use of a fictitious name for mailing, in violation of 18 U.S.C. §§ 371, 1028(a)(7), 1342, 1343, and 1344. Petitioner had operated a ponzi scheme from 1997 to 2002, where he recruited new “investors” and used their “investments” to pay earlier investors and to fund his personal expenses. See United States v. Schwartz, Crim. No. 03-35 (E.D.Pa. Jan. 16, 2003) (the “03-35 action”). Petitioner could not maintain the scheme with client funds alone and resorted to “check-kiting, ” where he wrote and deposited worthless checks into bank accounts under his control and then withdrew those funds before the bank could verify that the funds did not actually exist.

         While that case was pending before Judge Stewart Dalzell, the Government presented evidence that Petitioner engaged in criminal activity while on supervised release. “Petitioner made online payments to credit card companies from bank accounts with insufficient funds. These payments increased Schwartz's available credit line . . . [where] [h]e then incurred new charges on the credit cards before the payments were rejected.” United States v. Schwartz, Crim. No. 04-231, 2012 WL 1694292, at *1 (E.D. Pa. May 15, 2012). Petitioner testified that he believed he would have sufficient funds to cover those payments based on an anticipated loan and the sale of his mother's house, but Judge Dalzell found that there was probable cause to believe Petitioner had engaged in criminal activity and revoked his bail.

         Based on Petitioner's conduct during supervised release, a grand jury returned a new indictment in April of 2004, charging Petitioner with two counts of bank fraud, in violation of 18 U.S.C. § 1344, and a superseding indictment in June of 2004, charging Petitioner with an additional seven counts of wire fraud in violation of 18 U.S.C. § 1343. See United States v. Schwartz, Crim. No. 04-231 (E.D. Pa. Apr. 22, 2004) (the “04-231 action”).

         Thereafter, the 03-35 action proceeded to trial, where the Government presented evidence that Petitioner committed, among other things, bank fraud under Counts 8 through 16 of the indictment. As will be relevant later in the discussion, Petitioner committed two varieties of bank fraud. Under Counts 8 through 10, Petitioner committed bank fraud by forging the signature of his then-fiancée Peggy Sue Dorsey, on three checks from her closed bank account. Petitioner then deposited those checks, totaling $42, 000.00, to bank accounts under his control and then withdrew the funds before the banks realized that the funds did not exist.

         In contrast, although Counts 11 through 16 also involved check-kiting, Petitioner would write checks from his own bank accounts with insufficient funds, rather than forge the name of others. Petitioner then presented those checks for “cash, ” or deposited those checks to other bank accounts under his control and then withdrew those funds, totaling $434, 000.00.

         Judge Dalzell held a charge conference, during which, Petitioner objected to the proposed bank fraud instructions, which charged bank fraud as one offense, and permitted the jury to find Petitioner guilty if it found that he either executed a scheme or artifice to defraud a bank, under § 1344(1) or obtained money from a bank “by means of false or fraudulent pretenses, representations, or promises, ” under § 1344(2). 18 U.S.C. § 1344; (See ECF No. 1, at 4). Petitioner argued that writing a check on insufficient funds did not constitute a “representation” in light of the Supreme Court's decision in Williams v. United States, 458 U.S. 279, 284-85 (1982). Judge Dalzell denied Petitioner's request and charged the jury in the disjunctive, allowing the jury to convict Petitioner under either theory.

         On April 22, 2005, a jury convicted Petitioner of conspiracy to commit wire and bank fraud and identity theft; five counts of wire fraud; nine counts of bank fraud; and one count of use of a fictitious name for mailing.

         Although initiated later, the 04-231 action proceeded to trial prior to the 03-35 action. At that trial, the Government presented evidence that Petitioner committed, among other things, bank fraud under Counts 1 and 2. As to Count 1, Petitioner committed bank fraud by making an on-line payment of $3, 664.15 from his checking account at Citizens Bank to his Providian Bank VISA account. Petitioner knew he had insufficient funds to cover the payment and then used the newly available credit to incur approximately $2, 700.00 in additional credit charges.

         Similarly, under Count 2, Petitioner made online payments totaling $7, 379.59 from his Citizens Bank account to various credit cards he held with Capital One Bank, each time knowing he had insufficient funds to cover the payment. Petitioner then incurred additional credit charges.

         Like the 03-35 action, Petitioner alleges that he directed his counsel to object to the bank fraud instruction in accordance with Williams.[1] (ECF No. 14, at 15). Judge Harvey Bartle, III, denied Petitioner's request, and charged the jury in the disjunctive, allowing the jury to convict Petitioner under either the bank fraud statute's “scheme to defraud” theory or its “obtain money by false representation” theory. (see id. at 15-16; App.[2] 1278).

         On November 18, 2004, after a two-day trial, the jury convicted Petitioner of two counts of bank fraud and seven counts of wire fraud. (App. 1036). On April 11, 2005, Judge Bartel sentenced Petitioner to eighteen months' imprisonment in the 04-231 action, and on July 26, 2005, Judge Dalzell imposed a consecutive sentence of 225 months' imprisonment in the 03-35 action. United States v. Schwartz, No. 04-231, 2012 WL 1694292, at *4 (E.D. Pa. May 15, 2012).

         Petitioner filed an appeal in each case. The Third Circuit consolidated the appeals and affirmed Petitioner's convictions and sentences. United States v. Schwartz, 315 Fed.Appx. 412 (3d Cir. 2009). Petitioner then petitioned the United States Supreme Court for a writ of certiorari, and the Supreme Court denied that petition on April 26, 2010. Schwartz v. United States, 559 U.S. 1094 (2010).

         Shortly thereafter, Petitioner filed a timely motion for habeas corpus relief, pursuant to 28 U.S.C. § 2255, to vacate, set aside, or correct his sentence, in each of the underlying actions. On May 15, 2012, Judge Bartle denied the § 2255 petition in the 04-231 action, and on February 20, 2013, Judge Dalzell denied the § 2255 petition in the 03-35 action. United States v. Schwartz, 925 F.Supp.2d 663, 669 (E.D. Pa. 2013); United States v. Schwartz, No. 04-231, 2012 WL 1694292, at *4 (E.D. Pa. May 15, 2012).

         Petitioner then filed a petition for habeas relief under 28 U.S.C. § 2241, which is presently before this Court.

         III.STANDARD OF REVIEW

         “Habeas corpus petitions must meet heightened pleading requirements.” McFarland v. Scott, 512 U.S. 849, 856 (1994). A petition must “specify all the grounds for relief” and set forth “facts supporting each of the grounds thus specified.” 28 U.S.C. § 2254 Rule 2(c) (amended Dec. 1, 2004), applicable to § 2241 petitions through Habeas Rule 1(b). A court presented with a petition for writ of habeas corpus “shall forthwith award the writ or issue an order directing the respondent to show cause why the writ should not be granted, unless it appears from the application that the applicant or person detained is not entitled there.” 28 U.S.C. § 2243.

         Thus, “[f]ederal courts are authorized to dismiss summarily any habeas petition that appears legally insufficient on its face.” McFarland, 512 U.S. at 856; see also Siers v. Ryan, 773 F.2d 37, 45 (3d Cir. 1985). “[A] district court is authorized to dismiss a [habeas] petition summarily when it plainly appears from the face of the petition and any exhibits annexed to it that the petitioner is not entitled to relief in the district court[.]” Lonchar v. Thomas, 517 U.S. 314, 320 (1996).

         IV. DISCUSSION

         Petitioner challenges his convictions and sentences in this 28 U.S.C. § 2241 federal habeas action. Generally, a person must bring a challenge to the validity of a federal conviction or sentence under 28 U.S.C. § 2255. See Jackman v. Shartle, 535 Fed.Appx. 87, 88-89 (3d Cir. 2013) (citing Okereke v. United States, 307 F.3d 117, 120 (3d Cir. 2002)). This is generally true because § 2255 prohibits a district court from entertaining a challenge to a prisoner's federal sentence through § 2241 unless the remedy under § 2255 is “inadequate or ineffective.” See 28 U.S.C. § 2255(e). Indeed, § 2255(e) states that:

An application for a writ of habeas corpus in behalf of a prisoner who is authorized to apply for relief by motion pursuant to this section, shall not be entertained if it appears that the applicant has failed to apply for relief, by motion, to the court which sentenced him, or that such a court has denied him relief, unless it also appears that the remedy by the motion is inadequate or ineffective to test the legality of his detention.

         A § 2255 motion is “inadequate or ineffective, ” which permits a petitioner to resort to a § 2241 petition, “only where the petitioner demonstrates that some limitation or procedure would prevent a § 2255 proceeding from affording him a full hearing and adjudication of his wrongful detention claim.” Cradle v. U.S. ex rel. Miner, 290 F.3d 536, 538 (3d Cir. 2002) (citations omitted). However, § 2255 “is not inadequate or ineffective merely because the sentencing court does not grant relief, the one-year statute of limitations has expired, or the petitioner is unable to meet the stringent gatekeeping requirements of ... § 2255.” Id. at 539 (citations omitted). “It is the inefficacy of the remedy, not the personal inability to use it, that is determinative.” Id. at 538 (citation omitted). “The provision exists to ensure that petitioners have a fair opportunity to seek collateral relief, not to enable them to evade procedural requirements.” Id. at 539 (citing In re Dorsainvil, 119 F.3d 245, 251-52 (3d Cir. 1997)).

         In Dorsainvil, the Third Circuit held that the remedy under § 2255 is “inadequate or ineffective, ” permitting resort to § 2241 (a statute without timeliness or successive petition limitations), where a prisoner who previously had filed a § 2255 motion on other grounds “had no earlier opportunity to challenge his conviction for a crime that an intervening change in substantive law may negate.” 119 F.3d at 251.

         Nevertheless, the Third Circuit emphasized that its holding was not suggesting that a § 2255 motion was “inadequate or ineffective” merely because a petitioner is unable to meet ...


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