Gushlak v. United States of America
MEMORANDUM & ORDER denying 1 Motion to Vacate Restitution Order and Fine. For the reasons stated above, the Petition is DISMISSED. So Ordered by Judge Nicholas G. Garaufis on 3/3/2017. (fwd'd for jgm) (Lee, Tiffeny)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MEMORANDUM & ORDER
UNITED STATES OF AMERICA,
UNITED STATES OF AMERICA,
MYRON L. GUSHLAK,
NICHOLAS G. GARAUFIS,United States District Judge.
Before the court is Petitioner Myron Gushlak's petition for a writ ofcoram nobis^ (the
"Petition") under the All Writs Act,28 U.S.C. § 1651,filed on May 27,2016. (Mot. to Vacate
Restitution Order ("Pet.")(Dkt. 1), No. 16-CV-27I3.)^ Petitioner asks the court to vacate the
order of restitution and fine issued in his criminal trial. (Mem.in Supp. ofPet.("Pet'r's Mem.")
(Dkt. 1-2), No. I6-CY-2713, at 17.) The Petition relies on the sole grounds that Petitioner's trial
counsel were constitutionally ineffective in their failure to adequately investigate alternative
methods for calculating restitution. For the reasons discussed below,the Petition is DENIED.
Also sometimes called a "writ of error coram nobis." See Kovacs v. United States. 744 F.3d 44,49(2d Cir. 2014)
(using both terms).
^ Unless otherwise stated, all citations to docket entries refer to Petitioner's criminal docket. Case No.03-CR-833
The sections that follow review in relevant part the Petitioner's criminal charges, the
court's restitution orders, and the Petitioner's initial petition for a writ of habeas corpus. The
court assumes the parties' familiarity with the extensive underlying proceedings and summarizes
the record only to the extent necessary for the court's review ofthe Petition.
The Criminal Charges
On July 22,2003, Petitioner pleaded guilty to one coimt of conspiracy to commit
securities fraud,in violation of 18 U.S.C. § 371,and one count of conspiracy to commit money
laundering, in violation of 18 U.S.C. § 1956. rSee Feb. 23,2011, Mem.& Order(Dkt. 35), at 1
(discussing Sealed Minute Entry(Dkt. 5)).) As part of his guilty plea. Petitioner admitted that he
entered into a conspiracy by which he paid "kickbacks" to certain brokers in exchange for those
brokers' agreement to "aggressively push" stock in Global Net,Inc.("Global Net"), of which
Petitioner was the controlling owner. (See Apr. 20,2012, Mem.& Order(Dkt. 104)at 1.)
Neither Petitioner nor the brokers publicly disclosed these kickback payments to potential
investors. (Id.) The scheme successfiilly increased the stock price, allowing Petitioner to sell
roughly 1.1 million shares in Global Net at inflated prices between January 1999 and
December 2000. (Id at 1-2.)
The Restitution Submission and Orders
On November 18,2010,the court sentenced Petitioner to 72 months in prison and
a $25 million fine. (J.(Dkt. 47).) Because Petitioner pleaded guilty to an "offense against
property," the court was required by the Mandatory Victim Restitution Act(the "MVRA")to
order Petitioner to pay restitution to the victims of his fraud (See Apr. 20,2012, Mem.& Order
at 2 & n.2.(citing the MVRA,18 U.S.C. § 3663A)); however, at the time of sentencing,the court
was unable to determine the proper amount ofrestitution (see id. at 2). The court ordered the
Government to provide evidence ofthe victims' losses. tSee id.) Following a series of
submissions and orders,the court found by a preponderance ofthe evidence that restitution in the
amount of$17,492,817.45 constituted a "reasonable estimate" of victim losses attributable to
Petitioner's fraud and ordered Petitioner to pay this amount. (Id at 20.) Petitioner appealed the
restitution award to the Second Circuit, which affirmed the court's order in an opinion dated
August 29, 2013. See United States v. Gushlak, 728 F.3d 184(2d Cir. 2013). tSee also Mandate
of U.S.C.A (Dkt. 116)(dated Nov. 13, 2013).)
Petitioner's Habeas Petition
Petitioner completed the custodial portion of his sentence on November 10,2015.
(Pet. ^ 8.) In March 2015, while still in custody. Petitioner filed a separate petition to vacate the
restitution and fine pursuant to 28 U.S.C. § 2255. (Mot. to Vacate J.(Dkt. 1), No. 15-CV-1260.)
That habeas petition asserted the same claim now presented in the instant petition. ICompare
Mem.in Supp. ofPet'r's Mot. to Vacate (Dkt. 2), No. 15-CV-1260, with Pet'r's Mem.)
However,after a discussion with the U.S. Attorney's Office, Petitioner informed the court that
"the proper vehicle to challenge a restitution order and fine may not be a 2255 petition."^
(Pet'r's Ltr.(Dkt. 8), No. 15-CV-1260.) With the court's permission(Order Granting Mot. to
Withdraw Mot. to Vacate (Dkt. 9), No. 15-CV-1260),Petitioner withdrew his motion to vacate
imder Section 2255 and brought the instant petition shortly thereafter,
THE INSTANT PETITION
The sole basis for Petitioner's application for a writ ofcoram nobis is that he received
constitutionally ineffective assistance of counsel with respect to the court's calculation of
^ Petitioner and respondent were correct in theirjudgment that a motion to vacate an order ofrestitution and fime is
not properly raised under 28 U.S.C. § 2255. See Kaminski v. United States. 339 F.3d 84(2d Cir. 2003).
restitution.'^ In particular. Petitioner points to his attorneys' failure to interview any ofthe
purported victims of his securities fraud or to subpoena documents pertaining to those victims'
relevant trading history. Noting that the court, in accepting the Government's proposed
restitution calculation, found that Petitioner "failed to present strong countervailing evidence
to prevent the Government from meeting its burden of proof," Petitioner claims that victim
statements or investment records may have provided the necessary contradictory showing.
(Pet'r's Mem. at 8-9.)
Writs of Coram Nobis
The writ ofcoram nobis provides individuals with an "opportunity to challenge invalid
convictions after the sentence has already been served, but 'the results ofthe conviction still
persist.'" Dean v. United States. 418 F. Supp. 2d 149, 152(E.D.N.Y 2006)(citing United States
V. Morgan. 346 U.S. 502, 512-13(1954)); see also Camesi v. United States. 933 F. Supp. 2d 388,
393(E.D.N.Y. 2013). "[R]eliefunder the writ is strictly limited to those cases in which
'errors...ofthe most fundamental character' have rendered 'the proceeding itself irregular and
invalid.'" Foont v. United States. 93 F.3d 76, 79(2d Cir. 1996)(alterations in original)(quoting
United States v. Garter. 437 F.2d 444,445 (5th Cir. 1971)). Under the standard set by the
[a] petitioner seeking [relief under a writ of coram nobis] must
demonstrate that(1)there are circumstances compelling such action
to achieve justice, (2) sound reasons exist for failure to seek
appropriate earlier relief, and (3)the petitioner continues to suffer
legal consequences from his conviction that may be remedied by
granting ofthe writ.
'' Petitioner also seeks relief from the fine imposed by the court on the basis that loss calculation is relevant to the
calculation ofboth the restitution and fine amounts. (See Pet'r's Mem.at 17 n.lO.) Accordingly,the court's
analysis ofPetitioner's claims for relieffrom the restitution order should be regarded as addressing loss calculation
as it is relevant to the fine as Avell.
Id.(internal quotation marks, citations, and alterations omitted).
Under the first requirement set forth above,"ineffective assistance of counsel is one
ground for granting a writ of coram nobis." Kovacs. 744 F.3d at 49; see also Chhabra v. United
States, 720 F.3d 395,406(2d Cir. 2013). The Petition thus raises at least a facially acceptable
ground for obtaining relief; however, applications predicated on this basis must both satisfy the
other requirements for writs of coram nobis as well as the Strickland test for ineffective
assistance of counsel, discussed at greater length below. See Kovacs,744 F.3d at 49.
With respect to whether a coram nobis petitioner has "sound reasons" for any delay in
seeking such relief, "[t]he critical inquiry ... is whether the petitioner is able to show justifiable
reasons for the delay." Id at 54(quoting Foont,93 F.2d at 80). While Petitioner did not file his
petition until nearly 3 years after entry ofthe appellate court's judgment, he filed his initial
application for a writ of habeas corpus, predicated on the same grounds as those presented here,
less than 18 months after finalization. fSee supra Section II.C.) Petitioner's delay appears to be
attributable to his attorney's lack of awareness as to the writ's existence or proper use, a ground
which the Second Circuit has explicitly found to be justifiable. S^ Kovacs,744 F.3d at 54
(holding that a petitioner's unawareness ofthe writ,"which is as arcane as it is ancient," may
serve to excuse some delay where they have otherwise been diligent in seeking relief). Under
the circumstances,the court concludes that Petitioner's delay in seeking relief is excusable. See
du Purton v. United States, — F.Supp. 3d—,No. 15-CV-1026(ADS),2016 WL 7335614, at *3
(E.D.N.Y. Dec. 16,2016), appeal filed No. 17-151 (2d Cir. Jan. 13,2017)(noting that coram
nobis applications have no statute oflimitations, and so "[c]ourt[s] consider timeliness on a
case-by case basis").
As to the last requirement—^that a coram nobis petitioner must"continueQ to suffer legal
consequences from his conviction that may be remedied by the granting ofthe writ"—^the
Second Circuit has not stated definitively whether restitution orders satisfy this prong. However,
several district courts have held that a restitution order constitutes a continuing legal
consequence within the meaning ofthis requirement. See, e.g.. Camesi. 933 F. Supp.2d
at 393-94 (citing Kaminsky. 339 F.3d at 89-90(separate opinion of Calabresi, J.)); United States
V. Bilal. 941 F. Supp. 2d 397,404(S.D.N.Y. 2013). The court agrees with the conclusions
reached by other district courts in this circuit that a petitioner subject to a restitution order
"continues to suffer legal consequences from his conviction" and so may seek reliefthrough a
writ of coram nobis.
The sole remaining issue, then, is whether the petitioner can show that his counsel was
constitutionally ineffective and so demonstrate the required "compelling circumstances" entitling
him to coram nobis relief.
Ineffective Assistance of Counsel
As noted above, a coram nobis petitioner must satisfy the same requirements as
petitioners seeking post-conviction relief based on claimed ineffective assistance of counsel.
Kovacs. 744 F.3d at 49. The Supreme Court's decision in Strickland v. Washington.446
U.S. 668(1984), set the bar for asserting claims ofineffective assistance of counsel. "To
establish that counsel's performance was constitutionally defective," the petitioner bears the
burden ofshowing that(1)"the lawyer's performance fell below an objective standard of
reasonableness"; and(2)"there is a reasonable probability that, but for counsel's unprofessional
errors, the result ofthe proceedings would have been different." Torres v. Donnellv. 554
F.3d 322, 325(2d Cir. 2009)(citations and internal quotation marks omitted). The court finds
that Petitioner has failed to satisfy either element.
Performance of Counsel
Under the first prong of Strickland,"[a] defense counsel's performance is unreasonable
when it is so deficient that it falls outside the wide range of professionally competent assistance."
Kovacs. 744 F.3d at 50(internal quotation marks omitted). Under this standard,
[sjtrategic choices made after thorough investigation of law and
facts relevant to plausible options are virtually unchallengeable, and
even strategic choices made after less than complete investigation
do not amount to ineffective assistance—^so long as the known facts
make it reasonable to believe that further investigation was
Henry v. Poole.409 F.3d 48,63(2d Cir. 2005)(internal citations and quotation marks omitted).
Evaluating the attorneys' performance here requires a brief overview ofrestitution under
the MVRA. Where a defendant is convicted of a qualifying crime,the MVRA requires the court
to "order the defendant to pay restitution to any identifiable person directlv and proximatelv
harmed by the offense of conviction." United States v. Reifler. 446 F.3d 65,113(2d Cir. 2006)
(emphasis added). Cases such as Petitioner's present particular difficulty in evaluating victims'
losses. The crux ofthose claims is that:(1)the fraudster defendant artificially inflated the value
ofthe stock;(2)victim investors paid a higher price than dictated by market forces for the stock;
and(3)the victims experienced unfair losses when they sold their holdings after the value ofthe
stock declined for fraud-related reasons (e.g. cessation or revelation ofthe fraud). The
complexity in evaluating restitution in those cases stems from the proximate causation
requirement: a given security's price may change due to non-fraud factors, and the recoverable
loss experienced by an individual victim depends on the change in the value ofthe shares
attributable to the crime during the period that the victim held the security.
In order to respond to these difficulties, courts ordering restitution in securities j&aud
cases often proceed in two steps. First, the court must determine the portion of any change in a
given security's value attributable to the fraud versus extraneous factors. Gushlak. 728 F.3d
at 197(citing United States v. Zoln. 479 F.3d 715,719(9th Cir. 2007)). This calculation need
not be exact, and "requires only a reasonable approximation oflosses supported by a sound
methodology." Id. at 196. In Petitioner's own direct appeal, the Second Circuit noted that, due
to the sophisticated financial analysis required to determine aggregate investor losses,
courts can and ordinarily do rely on the testimony of one or more
experts for one side to establish a statistical model, and one or more
on the other side to bring to the court's attention the ways in which
that model may be unsound and, if necessary, propose a viable
Id. at 197. The resulting model does not, however, demonstrate the losses to any particular
victim; rather, it shows the amount ofthe security's value attributable to fraud on a given day.
Thus,the second step ofthe analysis is to plug in the dates on which each investor bought and
sold the security, determining whether the value oftheir holdings during that period was
decreased for reasons related to the fraud. See id. This allows the court to determine both
individual and aggregate victim losses and so to calculate the proper restitution amount.
In Petitioner's case, the court considered multiple Government submissions purporting to
calculate the proper amount ofrestitution. (See Dec.20,2010, Restitution Ltr.(Dkt. 21);
Jan. 26,2011, Restitution Reply Ltr.(Dkt. 29); Apr. 15,2011, Restitution Ltr.(Dkt. 42);
Oct. 24,2011, Sentencing Mem.(Dkt. 70).) The court rejected three such submissions,finding
the methodology or supporting detail to be lacking in such a way that the resulting victim loss
figures did not provide a "reasonable estimate" ofthe total amount ofthe actual loss. (See
Apr. 20,2012, Mem.and Order at 5-9.) Significantly, in response to one ofthe Government's
submissions. Petitioner's counsel proposed that determination ofthe aggregate loss amoimt
should be based on individualized victim loss affidavits rather than a more generalized loss
calculation methodology using data derived from trading records. (See Defs Reply to
Jan. 26,2011, Restitution Reply Ltr.(Dkt. 31)at 3-5.) Contemplating the MVRA's direction
that restitution should attempt to "fully compensate victims for their losses" and "restore [them]
to their original state of well-being,"(Feb. 23,2011, Mem.& Order at 8(quoting United States
V. Boccangna,450 F.3d 107,115(2d Cir. 2006)), the court found that
where there ^e a large number of potential victims who have
suffered quantifiable pecuniary losses differentiated only in their
magnitude, and where the losses sustained by all potential victims
are disclosed in the same business records, reliance on incomplete
loss affidavits from only some of the potential victims, instead of
those business records, would poorly serve the compensatory
purpose ofthe MVRA.
Id. Based on this assessment, the court found that "reliance on  loss affidavits is inappropriate
here." (Id at 9.) Instead,the court eventually adopted a loss valuation model proposed by a
Government expert that relied on statistical analysis and Global Net trading data to determine
aggregate losses without reference to individual or subjective loss attestations by victims.(See
generallv Apr. 20,2012, Mem.& Order; DeRosa Expert Report(Dkt. 71).)
As noted, the sole basis for Petitioner's ineffective assistance of counsel claim is that his
attomeys failed to collect affidavits and records from investors to "verify the bona fides ofthe
government's claims that each had actuallv suffered a loss as opposed to a profit, and if so the
amount lost." (Pet'r's Mem.at 8(emphasis in original).) Petitioner argues that evidence from
individual investors might have shown that the Government's loss valuation model did not
accurately reflect individual losses and so might have led the court to reconsider its reliance on
that model. (See id. at 7.) This argument disregards the court's previous rejection ofindividual
loss affidavits as a means ofevaluating aggregate victim losses, as described above. Given the
court's explicit contemplation and rejection ofindividual affidavits and records in favor of
objective data concerning aggregate loss, Petitioner's counsel can hardly be faulted for failing to
seek evidence ofindividual losses, either in the form of affidavits or supporting documentation.
Instead, his attorneys appear to have made the reasonable calculation that Petitioner was better
served by undermining the Government expert's methodology through presentation ofa contrary
expert report. rSee Apr. 20,2012, Mem.& Order 17-19(discussing Petitioner's opposing expert
report).) This strategic choice falls well within the discretion accorded to counsel in Strickland
review, and so the court finds that Petitioner cannot plausibly claim his attorneys acted
unreasonably in failing to collect individual affidavits or documents from the victims of his
Even absent its finding that Petitioner has not sufficiently alleged that his attomeys'
actions were objectively unreasonable, the court would conclude that the petitioner cannot show
sufficient prejudice to meet the Strickland requirements at this stage. Under Strickland's second
requirement—^that a petitioner show a "reasonable probability that...the result ofthe
proceeding would have been different" but for coxmsels' error(s)—a petitioner must show that
"absent [counsel's] errors, the fact finder would have had a reasonable doubt respecting guilt."
Strickland. 466 U.S. at 694-95. This prong is not satisfied by a showing that "the unprofessional
performance merely 'had some conceivable effect,"' Henrv.409 F.3d at 63(quoting
Strickland. 466 U.S. at 693), nor does it require a petitioner to show that"a counsel's deficient
conduct more likely than not altered the outcome in the case," Strickland. 409 U.S. at 693.
However,'"purely speculative' arguments about the impact ofan error do not establish
prejudice." DeCarlo v. United States. No. ll-CV-2175,2013 WL 1700921, at *4(S.D.N.Y.
Apr. 17,2013)(quoting United States v. Weiss, 930 F.3d 185,199(2d Cir. 1991)).
While Petitioner asserts at one point that "evidence from the investors... would have
resulted in a different and reduced amount ofloss and resulting fine and restitution,"(Pet'r's
Mem.at 16), he offers no support for this contention. Rather, Petitioner states that information
from the investors was a "potential source" ofinformation, while candidly admitting that he
cannot support the prejudice prong because he does not know what information those investors
might offer. (Id at 8,14-15.) Absent some affirmative indication that victim investors would
demonstrate some flaw in the Government's methodology. Petitioner cannot show a "reasonable
probability" that their statements would have changed the court's consideration and so fails to
show the requisite prejudice.^ See Rosario v. Bennett. 2002 WL 31852827,at*33(S.D.N.Y.
Dec. 20,2002)("[Petitioner] does nothing but assert that an investigation might have revealed
witnesses who might have supplied relevant testimony that might have been exculpatory. Such
speculation satisfies neither Strickland's deficient performance nor prejudice prongs."(collecting
^ Petitioner's submission requests that the Government provide the list of victim investors to support his
investigation into their losses. (Pet'r's Mem.at 15; Pet'r's Reply(Dkt. 13), No. 16-CV-2713, at 2).) "[D]iscovery
is allowed only ifthe district court, acting in its discretion, fimds'good cause'" based on '"specific allegations'" that
give '"reason to believe that the petitioner may,ifthe facts are fully developed, be able to demonstrate that he is
entitled to relief" Ferranti v. United States. 480 F. App'x 634,638(2d Cir. 2012)(summary order)(alterations
omitted)(quoting Bracv v. Gramlev. 520 U.S. 899.904(1997)); see also United States v. Durrani, 115 F. App'x
500,502-03(2d Cir. 2004)(summary order)(citing Flemming v. United States. 146 F.3d 88,90 n.2(2d Cir. 1998))
(indicating coram nobis petitioners must demonstrate "good cause" under the same standard applicable to petitions
for habeas corpus). For the reasons stated above,the court concludes that Petitioner has not shown good cause
sufficient to merit discovery, as the facts, even iffully developed, would not give reason to believe the court would
alter its restitution order.
For the reasons stated above,the Petition(Dkt. 1)is DISMISSED.
s/Nicholas G. Garaufis
Dated: Brooklyn, New York
riCHOLAS G. GARAUFl
United States District Judge
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