FALCI v. United States

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

VINCENTP.FALCL =——ss—SSC:

Petitioner, Civ. No. 20-8962 (RK)

v .

UNITED STATES OF AMERICA, OPINION

Respondent.

KIRSCH, District Judge

THIS MATTER comes before the Court upon a Motion to Vacate, Set Aside or Correct

his Sentence Pursuant to 28 U.S.C. § 2255. See ECF No. 1. In his Motion, Petitioner initially

proceeded pro se, and asserted two claims: Claim I, Petitioner stated his criminal defense trial

counsel (“Trial Counsel”) was ineffective by failing to advise him of the elements of the charged

offense required for conviction; and Claim I, Petitioner stated his Trial Counsel failed to provide

any defense to the wire fraud counts, /d. at 4-5. On January 2, 2024, the Court issued a

Memorandum & Order which ordered an evidentiary hearing on Claim I, appointed legal counsel

to represent him at said hearing, and reserved ruling on Claim II. On January 16, 2024, the Court

appointed Michael A. Armstrong, Esq. to represent Petitioner. On February 29, 2024, the Court

conducted an evidentiary hearing at which Petitioner and his Trial Counsel, John Yauch, Esq., an

Assistant Public Defender, both testified. Mr. Armstrong appeared on behalf of Petitioner and

Matthew Specht, an Assistant U.S. Attorney for the District of New Jersey appeared for the

Respondent, United States of America.

I. INTRODUCTION

Petitioner, Vincent P. Falci (“Petitioner” or “Falci”), is a federal prisoner currently

incarcerated at F.C.1. Fort Dix in Fort Dix, New Jersey. For the following reasons, Petitioner’s §

2255 motion is denied and a certificate of appealability shall not issue.

I. FACTUAL AND PROCDURAL BACKGROUND

From approximately 2006-2016, Petitioner defrauded investors of millions of dollars

through a Ponzi scheme. Petitioner told investors he would safely invest their money in two

investment funds he controlled named the Saber and Vicor Funds. See Presentence Investigation

Report (“PSR”) ¥ 14. Petitioner falsely represented to investors that the funds were growing year

after year when Petitioner was actually diverting investor money for his own personal use. See id.

{| 14-15. When investors requested a disbursement of their invested money, Petitioner would use

newly invested funds to make those redemptions. See id. J 16.

Petitioner began to raise money for the Saber Fund in 2001. See id. § 12. Petitioner

misrepresented to investors that the Saber Fund was invested in 85-90% tax lien certificates that

were growing steadily over time. See id. { 17. Petitioner further misrepresented to investors that

the fund’s performance handily beat indices and that the fund’s model made it virtually impossible

not to generate positive returns year after year. See id. In reliance on those misrepresentations,

investors gave Petitioner more money to invest for them on their behalf. Petitioner raised at least

$15,000,000 from investors for the Saber Fund. See id.

Petitioner diverted money to himself and to riskier investments. See id. 18. For example,

Petitioner paid himself and his family approximately $1,000,000 from the money invested in the

Saber Fund from 2006-2009. See id. Petitioner also transferred money from the Saber Fund to

brokerage accounts. See id. Those accounts lost money though through day trading and other

investments. See id. Petitioner also transferred $3,000,000 from the Saber Fund to another entity

he controlled to use that money to buy and rehabilitate residential properties. See id. Most of

those investments also lost money. See id.

In 2011, Petitioner began soliciting investments for the Vicor Fund. See id. 20. Petitioner

told those investors he was an experienced financial advisor, particularly in the area of tax liens.

See id. He touted his experience as the founder and operator of the Saber Fund, which he falsely

told investors was primarily invested in tax liens. See id. Petitioner raised millions of dollars for

the Vicor Fund, from which, in turn, he diverted a substantial portion for he and his family’s own

personal use. See id at Jf 20, 25. For example, from January 2015 to May 2016, Petitioner

distributed over $500,000 of investor money to himself and his family. See id.

Petitioner was arrested on December 16, 2016. He was charged by way of complaint with

two counts of wire fraud in violation of Title 18, United States Code, Section 1342 and Section 2;

and one count of securities fraud in violation Title 15, United States Code, Sections 78j(b) and

78ff. See Crim. No. 17-228 ECF No. | at 2-3.! In January 2017, Mr. John H. Yauch, Esq., was

assigned to Petitioner as his Trial Counsel. See Crim. No. 17-228 ECF No. 11.

On March 6, 2017, the government provided a written plea agreement to Petitioner. See

ECF No. 9-1. The plea agreement stated that the government would accept a plea of guilty to one

count of securities fraud, in exchange for a recommended sentence of eighty-four months in prison.

Petitioner rejected this plea offer.

On June 18, 2017, a federal grand jury indicted Petitioner on one count of securities fraud.

See Crim. No. 17-228 ECF No. 14.

' References to documents found within Petitioner’s criminal proceedings are explicitly cited with

that criminal action number in this opinion. Unless otherwise indicated, other ECF number

citations are from this civil action.

On August 9, 2018, the government again communicated to Petitioner a written plea offer.

See ECF No. 9-2. This plea offer, like the first, called for Petitioner to plead guilty to one count

of securities fraud, with the identical recommended sentence of eighty-four-months. Petitioner

again rejected the plea offer.

On August 23, 2018, a federal grand jury returned a superseding indictment against

Petitioner. See Crim. No. 17-228 ECF No. 43. This superseding indictment charged Petitioner

with one count of securities fraud and three counts of wire fraud. See Crim. No. 17-228 ECF No.

43.

The trial court conducted a hearing pursuant to Missouri v. Frye, 566 U.S. 134 (2012) to

ensure that Petitioner understood the contents of the plea offers and that he had discussed them

with his attorney before rejecting them prior to trial. The following colloquy took place between

Petitioner, the Court,” and counsel at this pretrial hearing:

[THE COURT]: Do you remember, Mr. Falci, receiving a proposed

plea agreement dated March 6th, 2017?

[FALC]]: Yes, Your Honor.

[THE COURT]: All right, so you recall receiving a copy of the

proposed plea agreement and you understood that the plea

agreement would be in lieu of the trial?

[FALCT]: Yes, Your Honor.

[THE COURT]: In other words, you plead or you go to trial. Those

are the choices.

[FALCI]: Yes, Your Honor.

[THE COURT]: Now, did you discuss that plea agreement with

your lawyer?

[FALC]]: I did.

[THE COURT]: And did the plea agreement have an expiration on

it? In other words, you have to plead by a certain date or thus and

such if you recall?

[FALC]]: I don’t recall specifically.

[THE COURT]: All right. But did you have enough time to discuss

it?

[FALC]]: I believe so.

The Honorable Anne. E. Thompson presided over Petitioner’s criminal proceedings.

[THE COURT]: And did you decide to accept the plea agreement

or to go to trial?

[FALCI]: I decided not to accept the plea agreement.

[THE COURT]: Isee. And you realized that the alternative would

be to go to trial?

[FALCT]: I did.

[THE COURT]: Now, did you understand that whether or not to

accept the plea agreement offered by the Government is entirely

your decision, not your lawyer’s decision? He is an experienced

professional who has been assigned to you to help you navigate the

legal system but he’s not the one who’s going to suffer the

punishment one way or the other. And, therefore, it’s not his welfare

that’s on the line. It’s yours. And, therefore, whatever he says is

advisory but the decision is yours, not his.

[FALC]]: I understand that, Your Honor.

[THE COURT]: Now, I understand there was another plea

agreement dated August 9th, 2018.

[FALC]]: Yes.

(THE COURT]: Do you remember that?

[FALC]]: Yes.

[THE COURT]: And again, did you have a chance to discuss it with

your lawyer?

[FALC]]: I did.

[THE COURT]: And did you appreciate the fact that this was

something that your lawyer could advise you on but it really was

going to be your decision, not his? You understood that?

[FALC]]: I understood it was my decision, Your Honor.

[THE COURT]: And you understood that if you took the plea

agreement, there would be no trial?

[FALCT]: I did.

[THE COURT]: But if you went to trial, you might end up with a

result much worse than might have happened in terms of your

exposure in the plea agreement?

[FALCI]: I understand that.

[THE COURT]: All right. And did you understand that nobody,

nobody, nobody can guarantee you what 12 jurors randomly

selected here will ultimately decide?

[FALC]]: I understand that.

[THE COURT]: And that this is a risk and it’s yours to make and

only you in the end will be the person to experience the

consequences of the decision. Did you understand that?

[FALC]]: Yes.

THE COURT: Mr. Herring [Government Assistant United States

Attorney], are there additional questions . . . with regard to this

subject --.... the Frye hearing.

MR. HERRING: No, Your Honor.

THE COURT: All right, thank you very much. Mr. Yauch, maybe

if you'd like to elaborate? Is there anything you’d like to seal this

proceeding with?

MR. YAUCH: Judge, I can just inform the Court that I’ve had

extensive discussions with the Government regarding a resolution

of this matter and I’ve communicated with my client, all of those

possible ways that this case could have been resolved short of trial

and it’s my client’s decision to elect to proceed to trial.

THE COURT: With all of the details that a trial encompasses,

Witnesses who may testify one way or may testify another way,

jurors who are ultimately strangers, who knows what is in their

heads, there are all of these factors which in any trial lawyers have

to consider in discussing with their clients what a trial encompasses.

You’ve done that with your client?

MR. YAUCH: Absolutely.

THE COURT: All right, thank you very much. If there’s nothing

further that either side would like said or questioned about, I’m

satisfied. Thank you.

ECF No. 9-3 at 6-10.

Trial Counsel filed pre-trial motions on behalf of Petitioner. After they were denied,

Petitioner’s trial commenced in December 2018. The government presented several witnesses.

The defense presented no witnesses, but Trial Counsel cross-examined the government’s

witnesses, moved for a judgment of acquittal, presented an opening statement on behalf of

Petitioner, and gave a closing argument. The jury returned a verdict of guilty on all four counts of

the superseding indictment. See Crim. No. 17-228 ECF No. 83. Petitioner was ultimately

sentenced to 180 months imprisonment. See id. ECF No. 95. Petitioner did not file a direct appeal.

Subsequently, Petitioner filed the instant § 2255 motion. See ECF No. 1. Petitioner raises

two claims in his § 2255 motion. In Claim I, Petitioner argues that Mr. Yauch was ineffective

during the plea process when he failed to notify Petitioner of the elements that the government was

required to prove for a conviction on the securities fraud charge. See ECF No. 1 at 4. More

specifically, Petitioner asserts Mr. Yauch improperly led him to believe that the government

needed to prove motive to obtain a securities fraud conviction. Had he been properly informed of

the securities fraud elements, Petitioner claims he would have accepted the plea offer. In Claim

Il, Petitioner argues Mr. Yauch provided ineffective assistance at trial by failing to provide a

defense on the three wire fraud charges. See id. at 5. The government filed a response in

opposition to Petitioner’s § 2255 motion. See ECF No. 9. Petitioner filed a reply brief in support

of his § 2255 motion. See ECF No. 12. As stated, on February 29, 2024, the Court conducted an

evidentiary hearing on Claim J. Both Petitioner and Mr. Yauch testified. The court will now

adjudicate Claim I and Claim IL.

tl. LEGAL STANDARD

A motion to vacate, set aside or correct a sentence of a person in federal custody pursuant

to 28 U.S.C. § 2255 entitles a prisoner to relief if “the court finds . . . [t]here has been such a denial

or infringement of the constitutional rights of the prisoner as to render judgment vulnerable to

collateral attack.” 28 U.S.C. § 2255(b). “In considering a motion to vacate a defendant's sentence,

‘the court must accept the truth of the movant's factual allegations unless they are clearly frivolous

based on the existing record.’” United States v. Booth, 432 F.3d 542, 545 (3d Cir. 2005) (quoting

Gov't of Virgin Islands v. Forte, 865 F.2d 59, 62 (3d Cir. 1989)) (other citation omitted). A court

“Is required to hold an evidentiary hearing ‘unless the motion and files and records of the case

show conclusively that the movant is not entitled to relief.’” Jd. at 545-46 (quoting Forte, 865

F.2d at 62). The Third Circuit has stated that this standard creates a “‘reasonably low threshold

for habeas petitioners to meet.’” Jd. at 546 (quoting United States v. McCoy, 410 F.3d 124, 134

(3d Cir. 2005) (quoting Phillips v. Woodford, 267 F.3d 966, 973 (9th Cir. 2001))). Accordingly,

a court abuses its discretion “if it fails to hold an evidentiary hearing when the files and records of

the case are inconclusive as to whether the movant is entitled to relief.” Jd. (citing McCoy, 410

F.3d at 134). The Court ultimately determined that Claim I necessitated an evidentiary hearing

but that Claim II did not.

IV. DISCUSSION

Both of Petitioner’s claims contend that Trial Counsel provided ineffective assistance of

counsel. The Sixth Amendment guarantees effective assistance of counsel. In Strickland v.

Washington, 466 U.S. 668 (1984), the United States Supreme Court articulated a two-prong test

for demonstrating when counsel is deemed ineffective. First, a petitioner must show that

considering all the circumstances, counsel’s performance fell below an objective standard of

reasonableness. See id. at 688; see also Grant v. Lockett, 709 F.3d 224, 232 (3d Cir. 2013) (noting

that it is necessary to analyze an ineffectiveness claim considering all circumstances) (citation

omitted). A petitioner must identify the acts or omissions that are alleged not to have been the

result of reasonable professional judgment. See Strickland, 466 U.S. at 690. Under this first prong

of the Strickland test, scrutiny of counsel’s conduct must be “highly deferential.” See id. at 689.

Indeed, “[c]ounsel is strongly presumed to have rendered adequate assistance and made all

significant decisions in the exercise of reasonable professional judgment.” Jd. at 690. The

reviewing court must make every effort to “eliminate the distorting effects of hindsight, to

reconstruct the circumstances of counsel’s challenged conduct, and to evaluate the conduct from

counsel’s perspective at the time.” Jd. at 689. If counsel makes “a thorough investigation of law

and facts” about his plausible options, the strategic choices he makes accordingly are “virtually

unchallengeable.” Gov’t of Virgin Islands v. Weatherwax, 77 F.3d 1425, 1432 (d Cur. 2006)

(citing Strickland, 466 U.S. at 690-91). If, on the other hand, counsel pursues a certain strategy

after a less than complete investigation, his choices are considered reasonable “to the extent that

reasonable professional judgments support the limitations on investigation.” Rolan v. Vaughn,

445 F.3d 671, 682 (3d Cir. 2006) (citing Strickland, 466 U.S. at 690-91).

The second prong of the Strickland test requires a petitioner to affirmatively prove

prejudice. See 466 U.S at 693. Prejudice is found when “there is a reasonable probability that,

but for counsel's unprofessional errors, the result of the proceeding would have been different.”

Id. at 694, A reasonable probability is probability sufficient to undermine confidence in the

outcome.” Id.; see also McBridge v. Superintendent, SCI Houtzdale, 687 F.3d 92, 102 n.11 (3d

Cir, 2012). “This does not require that counsel's actions more likely than not altered the outcome,

but the difference between Strickland’s prejudice standard and a more-probable-than-not standard

is slight and matters only in the rarest case. The likelihood of a different result must be substantial,

just conceivable.” Harrington v. Richter, 562 U.S. 86, 111-12 (2011) (internal quotation marks

and citations omitted).

“With respect to the sequence of the two prongs, the Strickland Court held that ‘a court

need not determine whether counsel’s performance was deficient before examining the prejudice

suffered by the defendant as a result of the alleged deficiencies .... If it is easier to dispose of an

ineffectiveness claim on the ground of lack of sufficient prejudice .. . that course should be

followed.” Rainey v. Varner, 603 F.3d 189, 201 (3d Cir. 2010) (quoting Strickland, 466 U.S. at

697).

1. Claim I~ Ineffective Assistance During Plea Proceedings

In Claim I, Petitioner argues that Mr. Yauch was ineffective by failing to properly explain

to Petitioner the elements the government needed to prove to convict him of securities fraud, most

notably, whether Petitioner’s motive was an element the government needed to prove for a

conviction. This purported failure by Mr. Yauch caused Petitioner to misapprehend the

government’s burden at trial and led Petitioner to reject the government’s plea offers.

Petitioner’s Sixth Amendment right to counsel extends to the plea-bargaining process. See

Lafler v. Cooper, 566 U.S. 156, 162 (2012). “When addressing a guilty plea, counsel is required

to give a defendant enough information “‘to make a reasonably informed decision whether to

accept a plea offer.’”” United States v. Bui, 795 F.3d 363, 367 (3d Cir. 2015) (quoting Shotts v.

Wetzel, 724 F.3d 364, 376 (3d Cir. 2013) (quoting United States v. Day, 969 F.2d 39, 43 (3d Cir.

1992))). “A defendant who rejects a guilty plea and receives a more severe sentence after trial

makes a claim of ineffective assistance when ‘he alleges that the advice he received was so

incorrect and so insufficient that it undermined his ability to make an intelligent decision about

whether to accept the offer.’” Morris v. Adm'r New Jersey State Prison, 770 F. App'x 601, 605 (3d

Cir. 2019) (quoting Day, 969 F.2d at 43). In the context of rejecting a plea, a petitioner must show

that “‘but for counsel’s deficient performance there is a reasonable probability he and the trial

court would have accepted the guilty plea’ and the resulting sentence would have been lower.”

Shotts, 724 F.3d at 376 (citation omitted). However, the Third Circuit has cautioned that courts

should be “wary” of claims that trial counsel did not adequately advise a defendant about the

benefits and consequences of a plea offer because “defendants will always want the best of both

worlds: the chance at acquittal at trial, yet the chance to plead guilty if the trial defense fails.” Day,

969 F.2d at 46 n.9.

In Claim I, Petitioner asserted as follows:

Mr. Yauch, allowed Petitioner to jump in with both feet without

telling him what was lurking under the surface. Indeed, Mr. Yauch

told Petitioner going to trial was a bad idea, but when Petitioner

repeatedly professed that he “didn’t steal any money,” and

maintained that he had his investors best interest in mind

throughout, Mr. Yauch should have explained to Petitioner that

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those factors did not matter. Not one bit. Neither theft, nor motive

are elements of the offense for which Petitioner was charged.

Instead, counsel told him if that were the case, “he couldn’t plead

guilty.” Thus, Petitioner proceeded to trial misunderstanding what

the government needed to prove to convict him....

If Petitioner had been properly informed, he would have graciously

accepted the government’s eighty-four month plea offer, rather than

proceed to trial...

Petitioner’s counsel knew about Petitioner’s misconception of the

elements the government needed to prove, but never corrected

Petitioner nor ever explained what the government was required to

prove. Indeed, Petitioner’s assertion to counsel time-and-time again

was that he a) didn’t steal any money and b) he had pure intentions

to turn a profit for his investors. Counsel never explained to

Petitioner that neither of those were elements the government would

be required to prove. Nor did he ever explain to Petitioner what the

government would have to prove. Counsel merely stated that the

government had to prove criminal intent, but Petitioner thought that

meant intent to steal the investor money. Counsel never even used

the word “element,” and beyond mentioning that the government

had to prove criminal intent, never elaborated further on the burden

of proof. Petitioner was adamant with Counsel that the government

could not prove he intended to steal the investor’s money. He

believed the only thing he was “guilty” of was choosing investments

that decreased in value rather than increased. Mr. Yauch responded

by telling Petitioner that if that were the case, then Petitioner “could

not plead guilty.” It is unclear from the record if defense counsel

knew the correct elements required for conviction under §§ 78j(b)

and ‘78ff.

ECF No. 1-2 at 2, 6.

Respondent opposed Claim I arguing that Petitioner failed to show that counsel’s

performance fell below an objective standard of reasonableness and/or that Petitioner failed to

show prejudice. Among the exhibits that Respondent included was a declaration from Mr. Yauch.

See ECF No. 9-6. In that declaration, Mr. Yauch stated that he thoroughly explained the elements

for each charge and at no time told Petitioner that the government needed to prove motive. See id.

at 2.

1]

The Court ultimately determined that an evidentiary hearing was warranted on Claim I.

See ECF No. 17. Indeed, a final decision on Claim J could have potentially involved (as it does in

this case) making a credibility determination between Petitioner’s and Mr. Yauch’s versions of

events. Both Petitioner and Mr. Yauch testified at the February 29, 2024 evidentiary hearing. A

brief recitation of their testimony at that hearing is described infra.

i, Petitioner’s Testimony

Petitioner testified at the hearing. He presented himself, as his Trial Counsel described, as

an amiable, likable individual. He was polite and conversational, and answered the questions posed

to him without anger or defensiveness. Notwithstanding, while he spoke in a measured, non-

confrontational tone, it is clear that some of his responses, particularly on the critical issues before

the court, strained the bounds of credulity. The court does not find that Petitioner intentionally

testified falsely or tried to mislead the court but rather, in light of the passage of time and the stress

of being under federal charges, it is the court’s conclusion that he failed to appreciate the

information and advice that his very experienced Trial Counsel provided to him over the span of

significant time and many face-to-face meetings.

Petitioner testified that this case was the first time he had been arrested. See Hr’g Tr. at

4-5, Feb, 29, 2024. He stated that he first met his assigned Trial Counsel in January of 2017, and

the court notes that the trial was conducted in December of 2018, almost two years after their first

meeting. Id. at 5. Petitioner, on cross-examination, admitted that he was arrested in December of

2016 on a complaint charging him with wire fraud and securities fraud, and that in March of 2017,

the government presented him with the first plea agreement wherein he would agree to plead guilty

to one count of securities fraud, which he rejected. /d. at 12. He admitted that, in June of 2017, the

was indicted by the grand jury to a count of securities fraud, and that in August of 2018, he rejected

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a second plea offer. /d. at 12-13. He acknowledged that a superseding indictment charged him with

one count of securities fraud and three counts of wire fraud, and he testified under oath, that he

understood that the result of a trial may well be worse for him than the terms contemplated by the

plea agreement. Jd. at 13.

He acknowledged that Trial Counsel explained the charges brought against him, although

he seemed to qualify the acknowledgement by adding “on a limited basis,” thereafter. Jd. at 5-6.

Despite their “several meetings,” Petitioner testified that he never heard the term “elements of the

offense” at any point, and that Trial Counsel never reviewed the elements of the charge of

securities fraud with him. Id. at 6-8. Without explaining the basis for this supposition, Petitioner

claimed as follows: “I-was under the impression that they simply had to prove that I stole money.”

Id. at 6. Now, years later, after learning the elements of securities fraud, he realizes that he, in fact,

was guilty and seeks to accept the plea offer which was tendered to him, twice, and rejected both

times. /d. at 18.

Petitioner, however, did admit that Trial Counsel did review the plea offer with him, and

that his lawyer advised him that he was exposed to a potential twenty year term in federal prison

on the charge of securities fraud. /d. at 8-9. Remarkably and implausibly, Petitioner denied that

Trial Counsel failed to review or discuss the application of the U.S. Sentencing Guidelines, and

denied so much as seeing a Sentencing Guidelines’ manual over the course of his meetings with

Trial Counsel. /d. at 9-10.

il. Mr. Yauch’s Testimony

Mr. Yauch confirmed he was assigned to represent Petitioner “in the early stages” of the

case. Id. at 21. Throughout his testimony, Trial Counsel did not exhibit, verbally or in body

language, any animus regarding the Petitioner. To the contrary, throughout his testimony, he

13

repeatedly referred to Petitioner as “Vinnie,” and described him as not “the typical white-collar

greedy bastard. He was — he was a good guy. He was a good decent, guy.” Id. at 27.

Mr. Yauch testified that he has been a criminal defense lawyer “(flor over thirty years.”

Id. at 19. He has represented “hundreds, if not thousands” of criminal defendants. See id. at 20.

Mr. Yauch was appointed to this case to represent Petitioner “in its early stages.” Jd. at 21. Mr.

Yauch consulted with Petitioner “many times.” Jd. Mr. Yauch testified about the volumes of

discovery in this case as the purported fraud took place over a ten-year period. See id. at 21-22.

The discovery included “financial statements, all the different entities involved .. . bank records”

and encompassed “thousands and thousands of pages[.]” /d. at 22.

Mr. Yauch then explained his defense team. “There was an investigator assigned to the

case; there was a paralegal assigned to the case; there was another attorney assigned to [the] case.”

Id. Both Mr. Yauch and the investigator spoke to many witnesses pre-trial. See id. In addition,

he stated that the defense had retained “several experts in connection with the case, mostly on a

consultant basis.” Jd.

Mr. Yauch filed several pretrial motions, but, after they were denied, he had “numerous

discussions” with Petitioner about his options. See id. at 23. These discussions occurred mostly

in person at Mr. Yauch’s Newark, New Jersey office. See id. During these discussions, Mr. Yauch

testified that “I made it plain to Mr. Falci that the evidence was overwhelming, and it was a terrible

case to take to trial, and I begged him, I literally begged him, to not take this case to trial, given

what could happen after a trial and a likely guilty verdict.” Jd. at 24, Indeed, Mr. Yauch testified

that the evidence against Petitioner was “suffocating.” Jd.

Mr. Yauch then testified that he went over what possible sentences Petitioner faced at trial

if convicted. Mr. Yauch testified that, in anticipation of his testimony, he reviewed his notes which

14

confirmed that “on several occasions” he advised “Vinnie,” the Petitioner, that his exposure under

the Sentencing Guidelines was 262-327 months and told him “you don’t want to be in that position.

The proofs are very strong.” See id. at 25. Indeed, Mr. Yauch stated that the more witnesses he

spoke to during his investigation, the worse the case got as it related to Petitioner’s guilt. See id.

at 25. He testified: “Every stone we unturned in the case didn’t make the case any better for us. It

only made it worse.” Id.

Mr. Yauch then testified about his conversations with Petitioner about the proofs the

government would need to show at trial. Mr. Yauch stated he had “many . . . specific discussions”

with Petitioner about the proofs the government would need to show and the likely proofs that

would be presented by the government. See id. at 24,25. Mr. Yauch was then questioned at the

evidentiary hearing whether motive was an element of any of the crimes for which Petitioner was

charged. See id. at 26. Mr. Yauch expressly testified that he never advised Petitioner that motive

was an element the government needed to prove for a conviction, but that the government “would

likely” present evidence of motive, which included evidence of money that he and his family

received, and that “he was living a good life for a couple years.” /d. at 26-27. Indeed, he further

noted that there was never any time that Petitioner indicated to him that Petitioner believed motive

was an element of securities fraud. See id. at 28-29. Most problematic, according to Trial Counsel,

were the proofs which “centered around all the monies that these investors put into his scheme and

all of the ways that he disguised the movement of monies and put together this scheme to defraud.”

Id. at 27.

Mr. Yauch was then questioned about the jury instructions at trial. He expressly stated that

he did not ask that motive be included as an element of the charges because “motive is not an

element of the intent to defraud.” See id. at 28.

15

After the government completed its direct examination of Mr. Yauch, the Court then asked

Mr. Yauch several questions. First, the Court inquired of Mr. Yauch how he reviewed the specific

elements of securities fraud with Petitioner. He responded as follows:

Well, most of the time it was done generally. We would describe —

I mean, in the indictment itself, we would go through the indictment,

because, of course, in order to plead not guilty at the arraignment,

he had to understand the nature of the charge against him. So we

would review it then.

Then, as I got up to speed and more comfortable with the case, we

would sit down and I would review with him, look, here’s what the

government is going to do to prove their case. Here are the elements.

And the crux of the defense, with all the charges, was — because of

the paper trail proved all the elements. The only thing that was in

question was the intent to defraud. So we had substantial

discussions regarding the intent — the intent to defraud and how that

element would be proved, and how it would be proved, in my

estimation, with the — the mountain of evidence the documentary

evidence regarding the different entities that were involved and

created by [Falci] in this scheme to defraud, and the movement of

monies amongst these different entities. And it was absolutely

suffocating in terms of, like I said, the — the volume of evidence and

proof, and we had discussions regarding that.

See id. at 31-32. The Court then concluded its colloquy with Mr. Yauch by inquiring whether Mr.

Yauch had educated himself about the elements of a securities fraud charge and whether he

reviewed those elements with Petitioner. See id. at 33. Mr. Yauch stated that he was certain before

the Frye hearing that he educated himself on the securities fraud elements and was “certain” that

he reviewed those elements with Petitioner. See id.

iii. Analysis

The testimony of Petitioner and Trial Counsel were consistent on a number of issues. For

example, it was clear to the court that Petitioner and Trial Counsel enjoyed a productive and open

attorney-client relationship, built over a substantial period of time, and over the course of many

face-to-face meetings. As stated, Trial Counsel had positive feelings for Petitioner and it is clear

16

to the Court that he was very devoted to providing Petitioner with the best legal advise possible

under the circumstances. Both acknowledged that Trial Counsel reviewed the charges with

Petitioner, and the plea agreements tendered by the government, and that Petitioner was aware of

the potential twenty-year sentence to which he was exposed if he was convicted of securities fraud.

Petitioner and Trial Counsel, however, differ on whether Trial Counsel reviewed the elements of

the offense of securities fraud with him, and whether motive was an element for securities fraud.

In assessing witness credibility, the Court is guided by several factors such as:

(1) the opportunity and ability to see or hear or know the things the

witness testifies to;

(2) the quality of the witness’s understanding and memory;

(3) the witness’s manner while testifying;

(4) whether the witness has an interest in the outcome of the case or

any motive, bias or prejudice;

(5) whether the witness is contradicted by anything the witness said

or wrote before trial or by other evidence;

(6) how reasonable the witness’s testimony is when considered in

the light of other evidence that you believe; and

(7) any other factors that bear on believability.

3d Cir. Model Civ. Jury Instructions § 1:7.

Mr. Yauch has thirty years of experience as a defense attorney and has worked with

hundreds of clients. Mr. Yauch’s testimony indicated how seriously he took this case and the

incredible volume of evidence he reviewed and evaluated. He assembled a team which consisted

of an investigator and a second lawyer. Mr. Yauch showed no animus towards Petitioner and, to

the contrary, he exhibited palpable regret years later in Petitioner’s unwavering insistence to go to

trial, notwithstanding his repeated and clear advise that it was not in his interest to do so. His

testimony was unambiguous that he talked to Petitioner about the proper elements that the

government needed to prove to secure a securities fraud conviction.

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After analyzing the relevant credibility factors, and having had the ability to observe both

Petitioner and Mr, Yauch at the evidentiary hearing, the Court finds Mr. Yauch’s testimony highly

credible and accords his testimony great weight. Thus, for the following reasons, Petitioner fails

to show that counsel’s performance fell below an objective standard of reasonableness with respect

to Claim I.

The review and discussion of the elements of a charged criminal offense with a client is a

foundational, rudimentary function of a defendant’s attorney. The notion that a highly experienced

and dedicated attorney like Mr. Yauch, on a case with such significant penal exposure to his client,

after having assembled a team (including an investigator, co-counsel, and a number of expert

consultants), after delving into thousands of pages of written discovery, and over a span of almost

two years would have failed to review the elements of securities fraud with his client is near

impossible to conjure. Mr. Yauch was adamant that he properly instructed Petitioner as to the

elements of the charges, and that motive was not one of them. Petitioner’s self-interested testimony

on this point, on what may be his last chance to challenge his judgment of conviction, wreaks of

implausibility. The court credits Mr. Yauch’s testimony in this regard.

The court also notes that Judge Thompson’s jury instructions were eminently clear that

motive was not an element the government needed to prove for a securities fraud conviction.

First, Judge Thompson recited the elements the government needed to prove for the jury to

find Petitioner guilty of the securities fraud charge; more specifically, Judge Thompson instructed

the jury as follows:

[Flour essential elements for Count 1 [securities fraud], all right?

One, that the defendant knowingly did one of the following as

detailed in the description of Count 1 of the indictment. Employed

any device, scheme or artifice to defraud or made any untrue

statement of a material fact or omitted to state a material fact

necessary in order to make the statements not misleading in light of

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the circumstances under which they were made or engage in a

transaction, practice or course of business which operated or would

operate as a fraud and deceit on a person. Any one of the three is

sufficient but the jury must be unanimous as to which one of the

three it was.

Two, moving on now to Element Number 2. We did Element

Number 1. Now we’re going to Element 2. Defendant did so in

connection with the purchase or sale of the securities described in

Count 1.

Three, in connection with this purchase or sale defendant made use

of or caused the use of any means or instrumentality of interstate

commerce or of the mails.

And four, the fourth essential element, defendant acted knowingly,

willfully and with the intent to defraud.

Crim. No. 17-228 ECF No. 87 at 27-28. Subsequently, Judge Thompson explicitly noted that

motive was not an element of the offenses charged. Indeed, she instructed the jury as follows:

Now, motive is not an element of the offense with which the

defendant is charged. Proof of bad motive — J think that heading is

supposed to be motive explained. [I’m just going to write that in,

motive explained at the header.

Proof of bad motive is not required to convict that the defendant is

guilty and proof of good motive alone does not establish that the

defendant is not guilty. Evidence of the defendant’s motive,

however, may help you find the defendant’s intent. Intent and

motive, however, are different concepts. Motive is what prompts a

person to act. Intent refers to the state of mind with which the

particular act is done. Personal advancement and financial gain, for

instance, are motives for much of human contact. However, these

motives may prompt one person to intentionally do something

perfectly acceptable while prompting another person to intentionally

do an act that is a crime.

Now, let’s define willfully. What does willfully mean? The offense

of securities fraud charged in the indictment requires that the

Government prove that the defendant acted willfully with respect to

an element of the offense. This means the Government must prove

beyond a reasonable doubt that the defendant knew his conduct was

unlawful and intended to do something that the law forbids. That is,

to find that the defendant acted willfully, you must find that the

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evidence prove beyond a reasonable doubt that the defendant acted

with a purpose to disobey or disregard the law.

Willfully does not, however, require proof that the defendant any

evil motive or bad purpose other than the purpose to disobey or

disregard the law. Willfully does not require proof that the actor of

the existence and meaning of the statute making his conduct

criminal.

See Crim. No. 17-228 ECF 87 at 43-45.

Judge Thompson’s instructions were clear. Motive was not an element of the securities

fraud charge. Had Mr. Yauch improperly instructed Petitioner or thought that motive was an

element of the securities fraud charge as Petitioner claims, it makes logical sense that an objection

would have been made to Judge Thompson’s jury instructions on motive. No objection was made.

This lends further credence to Mr. Yauch’s, as opposed to Petitioner’s, version of events.

Petitioner was properly advised of the elements of securities fraud. It did not include a motive

element.

Therefore, the Court finds Mr. Yauch’s representation of Petitioner did not fall below an

objective standard of reasonableness. Thus, Claim I is denied.?

2. Claim II — Ineffective Assistance of Counsel for Failing to Present a Defense to Wire Fraud

Counts

In Claim II, Petitioner asserts that counsel failed to provide a defense to the three wire fraud

counts against him at trial. Petitioner did not present any witnesses at trial. Mr. Yauch filed pre-

trial motions, cross-examined witnesses, moved for a judgment of acquittal, and otherwise argued

extensively on Petitioner’s behalf during opening and closing arguments.

Initially, the Court notes that Petitioner has come forward with no witnesses that Mr. Yauch

should have called on his behalf to testify at trial. In Duncan v. Morton, 256 F.3d 189, 202 (3d

*Given that Mr. Yauch’s performance did not fall below an objective standard of reasonableness

as to Claim I, the Court need not address whether Petitioner has shown Strickland prejudice.

an

Cir. 2001), the Third Circuit found that a habeas petitioner’s failure to present any sworn testimony

by the witnesses the habeas petitioner claimed counsel should have investigated and called as a

witness amounted to a failure to establish Strickland prejudice. In the § 2255 context, other courts

have similarly found that a petitioner needs to provide a sworn statement of fact from the proposed

witness regarding what they would have testified to if a § 2255 petitioner is to establish Strickland

prejudice. See Huggins v. United States, 69 F. Supp. 3d 430, 446 (D. Del. 2014) (noting that

movant did not provide an affidavit from the witness stating that he would have been available to

testify and or describing his potential testimony); Karamos v. United States, No. 04-0171, 2005

WL 2777552, at *4 (D.N.J. Oct. 24, 2005) (“[T]he Court cannot conclude that Petitioner was

prejudiced by counsel's failure to investigate or call these individuals as witnesses because

Petitioner has failed to provide a sworn statement of facts from any of the seventeen detailing their

proposed testimony.”).

Given Petitioner’s failure to come forward with any witness statements, the fact that Mr.

Yauch did not call any witnesses does not, in and of itself, constitute ineffective assistance of

counsel under the relevant Strickland standard. Furthermore, the Court has reviewed the record,

particularly the closing arguments by Mr. Yauch. Mr. Yauch strenuously argued that Petitioner

lacked criminal intent to be found guilty. See Crim. No. 17-228 ECF No. 88 at 56-78. Petitioner’s

conclusory statement that counsel did not provide a defense is belied by the record in this case.

Accordingly, Claim Il is denied as Petitioner fails to show that Mr. Yauch performed ineffectively

and/or failed to show prejudice by not defending him on the wire fraud counts.*

* While certainly not controlling to the Court’s disposition on Claim II, it is at least worth noting

that Judge Thompson stated at the close of trial that the attorneys maintained a high level of

professionalism throughout. See Crim. No. 17-228 ECF No. 89 at 5.

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V. CERTIFICATE OF APPEALABILITY

Pursuant to 28 U.S.C. § 2253(c), unless a circuit justice or judge issues a certificate of

appealability, an appeal may not be taken from a final order in a proceeding under 28 U.S.C. §

2255. A certificate of appealability may issue “only if the applicant has made a substantial

showing of the denial of a constitutional right.” 28 US.C. § 2253(c)(2). “A petitioner satisfies

this standard by demonstrating that jurists of reason could disagree with the district court’s

resolution of his constitutional claims or that jurists could conclude the issues presented are

adequate to deserve encouragement to proceed further.” Miller-El v. Cockrell, 537 U.S. 322, 327

(2003) (citation omitted). Applying this standard, the Court will deny Petitioner a certificate of

appealability.

VI. CONCLUSION

For the reasons stated above, Petitioner’s § 2255 motion is denied and a certificate of

appealability shall not issue. An appropriate order will be entered.° □ Lo □□

DATED: April 25, 2024 Nee ee -

ROBERT KIRSCH NN

United States District Judge □□

5 The Court expresses its appreciation to Mr. Michael A. Armstrong, Esq., for representing

Petitioner at the February 29, 2024 evidentiary hearing.

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