United States of America v. Castaldi

Filing 21

MEMORANDUM Opinion and Order. Signed by the Honorable John W. Darrah on 3/17/2016. Mailed notice(sxw, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FRANK CASTALDI,

)
)
) Case No. 15-cv-5575
)
) Judge John W. Darrah
)
)
)

Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.

MEMORANDUM OPINION AND ORDER
Petitioner Frank Castaldi filed a pro se Motion to Vacate, Set Aside, or Correct his
sentence pursuant to 28 U.S.C. § 2255, which was denied on February 9, 2016. On
February 29, 2016, Petitioner filed a Motion for Reconsideration [18]. For the reasons stated
below, Petitioner’s Motion [18] is denied.
BACKGROUND
Castaldi was charged with a violation of the mail fraud statute, 18 U.S.C. § 1341, arising
from a Ponzi scheme that he ran from 1986 to December 2008. Castaldi confessed to the scheme
in a series of interviews, beginning on December 19, 2008. Castaldi voluntarily provided
incriminating information regarding his offense, produced files, consented to a search of his
business, and met with law enforcement agents several times to describe the scheme and assist
with the analysis of records. Castaldi pled guilty to one violation of the mail fraud statute and to
one violation of 26 U.S.C. § 7212, interference with administration of internal revenue laws.
Castaldi cooperated without any promises or protection from the Government regarding charges
or sentencing.
Castaldi was sentenced to a two-hundred-and-forty-month term of imprisonment on the
violation of the mail fraud statute and a consecutive term of thirty-six months’ imprisonment for

interference with internal revenue services. Castaldi appealed the sentence, but the Seventh
Circuit affirmed. Castaldi filed a pro se Motion to Vacate, Set Aside, or Correct his sentence
pursuant to 28 U.S.C. § 2255, which was denied by this Court.
LEGAL STANDARD
“Motions for reconsideration serve a limited function: to correct manifest errors of law
or fact or to present newly discovered evidence.” Caisse Nationale de Credit Agricole v.
CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996). A manifest error “is not demonstrated by
the disappointment of the losing party”; it is the “wholesale disregard, misapplication, or failure
to recognize controlling precedent.” Oto v. Metropolitan Life Ins., 224 F.3d 601, 606 (7th Cir.
2000) (internal quotation marks omitted).
ANALYSIS
Petitioner’s pro se motion is liberally construed. See Erickson v. Pardus, 551 U.S. 89, 94
(2007). Petitioner does not cite to any manifest error of law or present any newly discovered
evidence. Rather, Petitioner reargues two issues of his habeas petition and again alleges
ineffective assistance of counsel.
Petitioner must demonstrate two elements to prove ineffective assistance of counsel.
First, “the defendant must show that counsel’s performance was deficient.” Strickland v.
Washington, 466 U.S. 668, 687 (1984). As to the performance prong, a court “consider[s] the
reasonableness of counsel’s conduct in the context of the case as a whole, viewed at the time of
the conduct, and there is a strong presumption that any decisions by counsel fall within a wide
range of reasonable trial strategies.” Valenzuela v. United States, 261 F.3d 694, 698-99 (7th Cir.
2001) (quoting United States v. Lindsay, 157 F.3d 532, 535 (7th Cir. 1998)). Second, “the
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defendant must show that the deficient performance prejudiced the defense . . . [i.e.] that
counsel's errors were so serious as to deprive the defendant of a fair trial.” Strickland, 466 U.S.
at 687. “Only a significant increase in the sentence, attributable to counsel’s error, constitutes
prejudice.” Durrive v. United States, 4 F.3d 548, 551 (7th Cir. 1993).
§ 5K2.16
Petitioner asks the Court to reconsider his counsel’s alleged failure to invoke United
States Sentencing Guidelines Policy Statement § 5K2.16, which states, “[i]f the defendant
voluntarily discloses to authorities the existence of, and accepts responsibility for, the offense
prior to the discovery of such offense, and if such offense was unlikely to have been discovered
otherwise, a downward departure may be warranted.” U.S.S.G. § 5K2.16. Specifically, Castaldi
argues that his counsel’s failure to raise this specific issue at trial resulted in the denial of a fair
and just appellate review of his sentence. The Seventh Circuit reviewed Castaldi’s claim under
plain error since the specific issue of § 5K2.16 was not raised at sentencing; however, the
Seventh Circuit held that there was “no error, let alone a plain or obvious one.” United States v.
Castaldi, 743 F.3d 589, 597 (7th Cir. 2014).
Castaldi argues that his trial counsel failed to inform the Court that he successfully paid
$500,000 to an investor who demanded immediate payment in November 2008. Based on this,
Castaldi alleges that this fact was kept from the Court. However, as previously stated in the
ruling on the habeas petition, Castaldi’s sentencing memorandum does indicate that a request
was made for half a million dollars in November 2008 and states that Castaldi went to friends
and others to borrow money in order to pay that investor back. (Def’s Sent. Memo, p. 20.) The
Court also heard argument that the Government was not investigating, or aware of, Castaldi’s
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Ponzi scheme. See (Sent. Tr. 81:13-17.) There was no error by Castaldi’s counsel because
counsel filed a sentencing memorandum that indicated the demanded funds were paid.
Furthermore, there was no prejudice, as evidence indicated Castaldi knew his scheme was
on the verge of collapse. The sentencing memorandum also stated that “[a]t the same time, all of
[Castaldi’s] businesses were failing and the economy was sagging.” (Def’s Sent. Memo,
p. 20.) Additionally, at the sentencing hearing, one victim testified that she was suspicious of
Castaldi and asked him questions just before he turned himself in. (Sent. Tr. 38:23-39:5.)
This was also indicated by the Seventh Circuit, which stated: “. . . we can reasonably infer that
some of the many victims who lost so many millions would have found their way to law
enforcement.” Castaldi, 743 F.3d at 597.
The basis for § 5K2.16 was considered by the Court through the Defendant’s sentencing
memorandum and the Government’s argument and rejected as a mitigating factor: “I guess what
I’m reacting to is some suggestion that he wasn’t in arrears with any of these people. The reason
he did that is because he was creating more potential ̶ [victims]. . . I don’t view that as a plus.”
(Sent. Tr. 79:16-22.) Petitioner’s counsel did not commit error, and Petitioner did not suffer
prejudice. Petitioner has cited to no manifest errors of law or fact and has presented no newly
discovered evidence as to his § 5K2.16 argument.
Binding Plea
Petitioner also argues that his counsel should have sought a binding plea agreement.
Under this preface, and for the first time, Petitioner raises the issue that his counsel was
ineffective for not seeking relief from a speedy trial violation. Motions to reconsider “are not

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appropriate vehicles for introducing evidence that could have been produced prior to the entry of
judgment or for tendering new legal theories for the first time.” Jefferson v.
Sec. Pac. Fin. Servs., Inc., 162 F.R.D. 123, 125 (N.D. Ill. 1995) (citing Publishers Resource, Inc.
v. Walker-Davis Publications, Inc., 762 F.2d 557, 561 (7th Cir. 1985)). This is both a new legal
theory and, if there were evidence that such a violation occurred, evidence that could have been
produced in Petitioner’s request for habeas relief.
The record reflects that the Government filed two agreed motions for an extension of
time to return the indictment, which were granted by Judge Holderman. Those motions extended
the time to file an indictment to July 22, 2009; and the indictment was entered on July 21, 2009.
Petitioner argues that these were inappropriate “prospective waivers” that his counsel could not
agree to. Zedner v. United States, 547 U.S. 489, 502 (2006). However, Petitioner does not argue
that Judge Holderman failed to make the requisite findings on the record in granting the
Government’s requests to exclude time. See id. at 508 (“. . . if a judge fails to make the requisite
findings regarding the need for an ends-of-justice continuance, the delay resulting from the
continuance must be counted, and if as a result the trial does not begin on time, the indictment or
information must be dismissed.”)
Petitioner then makes the related argument that his counsel was ineffective for failing to
use a motion to dismiss as “leverage” for a binding plea agreement. Again, there is no allegation
that a binding plea agreement was offered or would have been accepted by the Government.
Petitioner’s counsel was not ineffective for failing to file a motion to dismiss due to a speedytrial violation and was not ineffective for not using a motion to dismiss as leverage for a binding
plea agreement.
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CONCLUSION
Petitioner’s Motion for Reconsideration [18] is denied.

Date:

March 17, 2016
JOHN W. DARRAH
United States District Court Judge

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