7th Circuit: Ineffective attorneys argument in fraud case deserves a hearing

After the 7th Circuit Court of Appeals vacated the district court’s denial of his motion to vacate his sentence, an Indiana man will have the chance to present his argument that if he had not followed the advice of his “constitutionally ineffective” lawyers and turned down a plea offer, his sentence would have been significantly less than the 92 months he received. One of the lawyers he accuses is now a magistrate judge.

David Day Jr. was indicted for conspiracy to commit wire fraud for his participation in a fraudulent scheme disguised as a “credit repair service” for people with a poor credit history.

In September 2013, a grand jury returned a 34-count indictment against Day and 17 coconspirators. Day was offered a deal: if he pleaded guilty to one count of conspiracy to commit wire fraud, the government would drop the count of asking false statements in loan and credit applications.

The agreement did not specify a sentence, but the prosecutor believed sentencing would be between 51 and 63 months. According to court documents, Day’s public defender, Monica Foster, told him to “reasonably expect” the government to move for a lower sentence because of his cooperation with authorities, which could reduce the bottom of the sentencing range to as low as 36 months.

Day said he was ready to accept the government’s offer but, at his father’s urging, he sought a second opinion from private attorney John Schwartz, who then brought in attorney John M. Christ. According to court documents, Day alleged he showed these two attorneys other websites offering similar “credit repair” services and they told him that he was not guilty of any offense because he “could not be convicted for conduct that others were engaging in openly.”

Day accepted their advice to reject the plea deal and to retain them for $30,000 to take the case to trial. Foster told Schwartz and Christ, who since has been appointed as a Marion Superior Court magistrate judge, that the case file was available for pickup at her office but, court documents state, Day later learned they never retrieved the file.

At a rescheduled pretrial hearing in January 2015, Day’s counsel arrived late and “displayed a significant lack of preparation for trial, which was less than two weeks away,” according to court documents. Day still formally turned down the government’s renewed plea offer.

However, court documents state, after hearing Day’s attorneys told him based on the strength of the government’s evidence that he would lose at trial. Day asked his attorneys to negotiate a plea agreement, but they advised he would be better off throwing himself on the mercy of the court.

Once Day pleaded guilty, the presentence report recommended a sentencing range of 135 to 168 months, but district court granted the government’s § 5K1.1 motion that lowered the range 87 to 108 months. Judge Tanya Walton Pratt imposed a term of 92 months in prison.

Day eventually filed a 28 U.S.C. § 2255 motion, pro se, to vacate his sentencing, asserting that Schwartz and Christ were “constitutionally ineffective for advising him to reject the government’s plea offers despite never reviewing Foster’s case file or the government’s discovery.” He alleged, if properly advised, he would have accepted either the initial offer of “about 36 months” or the second offer of “about 54 months,” which likely would have resulted in a lower sentence than his current 92 months.

The government countered that Day could not establish that if advised by his attorneys, he would have accepted the plea deal that had a recommended sentencing range of 51 to 63 months. Even if he could show he would have taken the deal, he could not show he would have received less prison time than what he eventually did get because the proffered plea agreement was not binding on the judge.

Also, the government told the court, it had requested affidavits from Day’s private attorneys but Schwartz declined to provide one and Christ did not respond.

Walton Pratt denied Day’s motion and Day appealed, challenging the court’s denial without an evidentiary hearing.

The unanimous 7th Circuit panel vacated the judgment and remanded for further proceedings in David L. Day, Jr. v. United States of America, 18-2398.

In particular, the appellate court held the district judge’s finding that Day could not show prejudice because the plea agreement would not bind the court to a particular sentence was based on a “flawed legal analysis.” The 7th Circuit said the question is not whether the sentencing judge is bound by a plea agreement but whether it is reasonably probable that the court “would have accepted its terms.”

“The judge’s prejudice analysis also overlooks the practical realities of plea negotiations,” Judge Diane Sykes wrote for the court. “Few court observers would contend that the government’s views as reflected in its plea stipulations and Guidelines recommendations have no influence on a judge’s real-world sentencing decisions. … Why would prosecutors offer nonbinding plea agreements — and defendants accept them — if they count for nothing in the sentencing decision?”

Remanding the case, the 7th Circuit said the prejudice question requires further factual development. The judge did address whether it is reasonably probable that Day would have accepted the renewed plea offer had Schwartz and Christ advised him to do so.

Even so, the court warned Day still has to show he would have gotten a lower sentence.

“If on remand Day establishes a reasonable probability that he would have accepted the renewed plea offer but for the incompetent advice of his attorneys, his work is not yet done,” Sykes wrote.  “Day must still show a reasonable probability that he would have received a sentence lower than 92 months. If he does so, then the Judge should grant Day’s § 2255 motion and, within her discretion, craft an appropriate remedy.”