Mandell v. United States of America
OPINION & ORDER. Mandell fails to establish a plausible claim of ineffective assistance of counsel based on Hoffman's purported actual or potential conflict of interest, or Hoffman's supposed failure to file an interlocutory appeal. His Pet ition is denied in all respects, and no hearing is necessary. Because Mandell has not "made a substantial showing of the denial of a constitutional right," a certificate of appealability will not issue. See 28 U.S.C. § 2253(c)(2). The Clerk of Court is directed to terminate the motion pending at docket number 317 in Case No. 09 Cr. 662, and to close Case No. 16 Civ. 1186. SO ORDERED. (Signed by Judge Paul A. Crotty on 5/23/17) Copies Mailed By Chambers. (yv)
DOC #: _________________
DATE FILED: May 23, 2017
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ROSS H. MANDELL,
UNITED STATES OF AMERICA,
16 Civ. 1186 (PAC)
09 Cr. 662 (PAC)
OPINION & ORDER
HONORABLE PAUL A. CROTTY, United States District Judge:
On July 26, 2011, following a five-week trial, the jury convicted pro se petitioner Ross
Mandell of (1) conspiracy to commit securities, wire, and mail fraud, (2) securities fraud, (3)
wire fraud, and (4) mail fraud. He was sentenced to a term of 144 months in prison. The Second
Circuit affirmed his conviction and sentence, United States v. Mandell, 752 F.3d 544 (2d Cir.
2014), and the Supreme Court denied certiorari, Mandell v. United States, 135 S. Ct. 1402
Mandell now petitions, pursuant to 28 U.S.C. § 2255, for reversal of his conviction and
vacation of his sentence. He argues that his trial attorney, Jeffrey Hoffman, suffered from an
actual and potential conflict of interest because he simultaneously represented and had a close
relationship with an unindicted coconspirator, and that Hoffman was ineffective because he did
not file an interlocutory appeal after the Court denied Mandell’s motion to dismiss.
Mandell does not plausibly establish either a lapse in Hoffman’s representation, or that
Hoffman’s representation was objectively unreasonable and that Mandell was prejudiced as a
result. The Court therefore denies Mandell’s Petition.
Relevant Procedural History
In June 2009, a grand jury indicted Mandell along with five co-defendants, Stephen Shea,
Adam Harrington, Arn Wilson, Robert Grabowski, and Michael Passaro. See Dkt. 2. 1 On
December 14, 2010, a superseding indictment charged Mandell with four crimes: (1) conspiracy
to commit securities, wire, and mail fraud, (2) securities fraud, (3) wire fraud, and (4) mail fraud.
On December 2, 2010, Mandell moved to dismiss the securities fraud and conspiracy to
commit securities fraud charges based on the Supreme Court’s decision in Morrison v. National
Australia Bank Ltd., 561 U.S. 247 (2010). Dkt. 91. Mandell argued that Morrison precluded the
extraterritorial application of the anti-fraud provisions of the Securities Exchange Act.
According to Mandell, because the conduct alleged in the indictment related to securities sales
that occurred outside of the United States and not on an American exchange, dismissal of the
securities fraud and conspiracy to commit securities fraud charges was required. The Court
denied Mandell’s motion on March 16, 2011. Dkt. 115.
Between January 25, 2011 and February 14, 2011, defendants Grabowski, Passaro,
Wilson, and Shea pleaded guilty to certain counts in the superseding indictment. The remaining
two defendants, Mandell and Harrington, did not plead guilty, and instead proceeded to trial.
Trial commenced on June 20, 2011, and concluded on July 26, 2011, when the jury found
Mandell and Harrington guilty of all charges against them.
Following their convictions, Mandell and Harrington moved pursuant to Fed. R. Crim. P.
29 for a judgment of acquittal and alternatively pursuant to Fed. R. Crim. P. 33 for a new trial.
Docket citations, unless otherwise specified, are to United States v. Mandell, 09 Cr. 662 (PAC) (S.D.N.Y.).
Dkt. 161, 163. They contended, among other things, that the government failed to prove intent
to engage in a scheme to defraud, intentionally false or fraudulent representations, or fraudulent
domestic securities transactions within the applicable limitations period. The Court denied their
motions on November 2, 2011. Dkt. 173. On May 3, 2012, the Court sentenced Mandell to a
total term of 144 months of imprisonment. See Dkt. 204. The Court also ordered Mandell to
make forfeiture of $50 million, pay a fine of $10,000, and pay a mandatory special assessment of
Mandell appealed his judgment of conviction and sentence on May 10, 2012. Dkt. 208.
He challenged, among other things, his securities fraud conviction based on the Supreme Court’s
decision in Morrison. See United States v. Mandell, 752 F.3d 544 (2d Cir. 2014). The Second
Circuit rejected Mandell’s argument, and on May 16, 2014, affirmed Mandell’s conviction and
sentence. 2 Id. On February 23, 2015, the Supreme Court denied certiorari. Mandell v. United
States, 135 S. Ct. 1402 (2015).
Summary of Trial
Over the course of a five-week trial, the government introduced evidence that Mandell
and Harrington were guilty of conspiracy to commit securities, wire, and mail fraud; and
substantive counts of securities, wire, and mail fraud. The trial involved more than twenty
witnesses, hundreds of exhibits, and a transcript spanning nearly 4,000 pages.
The Government’s Case
The substance of the government’s case against Mandell was that Mandell used two Wall
Street brokerage firms, the Thornwater Company (“Thornwater”) and Sky Capital, LLC (“Sky
Mandell also argued on appeal that his co-defendants should have been made jointly and severally liable for
forfeiture. The government conceded error, and the Second Circuit vacated and remanded as to that sole issue. On
May 22, 2014, the Court issued an amended forfeiture order. Dkt. 258.
Capital”), to defraud foreign and domestic investors out of millions of dollars. The evidence
showed that the scheme started in 1998 with Thornwater. Grabowski wanted to start his own
brokerage firm. Mandell helped Grabowski do so, and Grabowski was eventually installed as
president of Thornwater. Grabowski testified, however, that Mandell, despite having no
documented ownership interest in or power to have control over Thornwater, ran the show from
behind the curtain. For instance, Mandell controlled who was hired and fired; the spending of
funds; and what private placements to offer to investors. Mandell also directed brokers on how
to pitch several private placements that purportedly would bring certain companies public,
instructing the brokers to lie about the potential risks and rewards associated with the
investments. The Thornwater brokers lied about the certainty that the companies would go
public; the returns the investors would earn; and the way the investors’ money would be spent.
Around 2000-2001, Mandell decided that he wanted to open a new brokerage firm that
would appear unrelated to Thornwater. Thornwater was running out of cash, and investor
complaints were steadily increasing. But even as Mandell was purportedly separating from
Thornwater, he continued to exercise control from behind the scenes. He resigned from
Thornwater on or about January 30, 2001, and entered into a sweetheart deal to extract tens of
thousands of dollars from Thornwater. He moved across the street from Thornwater, opened Sky
Capital, and started hiring Thornwater brokers to work at Sky Capital. He also continued to use
Thornwater to raise money through a private placement called Dorchester Holdings. Dorchester
Holdings served to keep Thornwater open while money was being raised for Sky Capital to get
off the ground.
In June 2002, Sky Capital offered stock in the initial public offering (“IPO”) of an
affiliated company, Sky Capital Holdings Ltd. (“Sky Capital Holdings”). Sky Capital Holdings
was listed on the Alternative Investment Market (“AIM”) in London, a smaller market of the
London Stock Exchange. Sky Capital represented that a British brokerage firm would handle the
initial placement of stocks, but Mandell and Harrington used their own brokers from Thornwater
to sell the shares in London. Then, because investor money went to the British brokerage firm,
the Thornwater brokers were paid commissions out of the Dorchester Holdings bank account. In
March 2004, another related company, Sky Capital Enterprises, was also listed on the AIM.
With stock trading on the AIM, the scope of the fraud scheme expanded. In order to
entice investors to part with their money, the brokers offered investors the chance to purchase the
publicly traded Sky Capital stock at a “discount” through private stock offerings. They had to
artificially prop up the stock price of the shares on the AIM in order for the investors to feel that
they were getting a bargain. The brokers crossed stock trades, operated under a no net sales
policy, and received undisclosed commissions (really bribes) as a reward for perpetuating the
scheme. The evidence showed that Mandell was aware of the market manipulation, and why the
market was being manipulated. Additionally, investors were told, at Mandell’s direction, that
there was a big liquidity event just around the corner; but of course, no liquidity event occurred.
At trial, Mandell argued that the government failed to meet its burden of proving his guilt
beyond a reasonable doubt. His attacks focused on the (supposed) lack of evidence of his control
at both Thornwater and Sky Capital. He stressed that Grabowski controlled and was the owner
of Thornwater, not Mandell; that Grabowski had the authority at Thornwater to disburse money,
not Mandell; that Grabowski’s name was on Thornwater documents filed with the Federal Trade
Commission and the National Association of Securities Dealers (“NASD”), not Mandell’s; and
that Grabowski had the power to fire Mandell. Mandell was just a broker at Thornwater looking
to represent his clients, not some puppet master operating in the shadows. In other words,
Grabowski’s testimony was all a lie. At Sky Capital, Mandell highlighted that he was not the
president; that he could not and did not run the company; and that there was a legitimate board of
directors that made decisions relating to Sky Capital.
With respect to the brokers’ pitches, Mandell argued that the brokers chose to lie to
investors and potential investors on their own, and now that they had been caught, they sought to
make Mandell the fall guy. They lied at trial about Mandell’s involvement in order to provide
substantial assistance to the government so they could get the benefit of their cooperation
agreements and potentially lower sentences. And the investors who took the stand and explained
how they were defrauded were all in fact sophisticated and understood the risks associated with
their investments. Mandell claimed that he played by the rules. He spent millions on lawyers to
ensure that his actions did not violate any laws, and that was why, for example, the private
placements were accompanied by memoranda that identified risks associated with the
investments. He successfully brought two companies public on the AIM, and certain investors in
fact were able to make money.
The jury rejected Mandell’s defense. On July 26, 2011, after two and a half days of
deliberation, the jury found Mandell guilty of all four counts against him. As the Court
explained in considering Mandell and Harrington’s Rule 29 and Rule 33 motions, “the jury’s
verdict was based on overwhelming evidence that defendants had defrauded investors and
enriched themselves at the investors’ expense.” Dkt. 173 at 6.
Steven Altman was an uncharged participant in the criminal scheme. He did not testify,
but his role was discussed throughout the trial. Altman was a close friend of Mandell, and was
an attorney for both Thornwater and Sky Capital. Altman, his firm, Ziegler, Ziegler and Altman
(“ZZA”), and his partner Steve Ziegler were involved in several of the Thornwater private
placements. Ziegler or Altman would help set up the private placements, and investors would
wire money into a ZZA escrow account. Altman also coached employees to lie under oath to the
NASD and state that Grabowski—not Mandell—controlled Thornwater. Additionally, Altman
dealt with disgruntled investors and offered them deals that were less favorable than what the
investors were originally promised in order to keep them from complaining. Altman directed at
least one broker to sign a promissory note that served to conceal that the broker was receiving
undisclosed commissions. Finally, Altman told at least one broker that crossing stocks was legal
and proper and that Sky Capital’s conduct was consistent with industry rules and regulations.
On February 11, 2016, Mandell filed his § 2255 Petition. He contends that his Sixth
Amendment right to conflict-free counsel was violated because Hoffman’s loyalties were divided
between Mandell and Altman. Mandell asserts that while Hoffman was representing Mandell,
Hoffman and Altman had a very close relationship: Altman referred at least two high-paying
clients to Hoffman, including Mandell; Hoffman and Altman shared office space; and Hoffman
and Altman had a father/son relationship. Mandell also asserts that he learned after trial that
Hoffman had been simultaneously representing Altman in connection with a Securities and
Exchange Commission (“SEC”) proceeding. 3 That proceeding, however, had nothing to do with
any of the facts at issue in Mandell’s case. Rather, it dealt with Altman’s conduct as a lawyer for
a friend who had been discharged by a company she worked for.
The Court has found no record references and does not recall being aware, prior to Mandell’s Petition, of
Hoffman’s simultaneous representation of Altman and Mandell.
On November 10, 2010, the SEC found that Altman had offered to have one of his clients
“evade the [Division of Enforcement’s] service of a subpoena and/or testify falsely in exchange
for a financial package from two respondents in the proceeding.” In re Steven Altman, Esq.,
Release No. 63306, 2010 WL 5092725, at *1 (Nov. 10, 2010). Consequently, the SEC
permanently denied Altman the right to practice or appear before it. See id. Hoffman
represented Altman during the SEC proceeding, including before the Administrative Law Judge,
as well as in an action Altman later filed against the SEC. See id.; Affidavit of Jeffrey C.
Hoffman, Esq. (“Hoffman Aff.”), Dkt. 326, ¶ 3; Altman v. S.E.C., 10 Civ. 9141 (RJH)
(S.D.N.Y.). On December 7, 2010, Altman brought an action against the SEC in the Southern
District of New York for declaratory and preliminary and permanent injunctive relief (“Altman
Action”). Altman v. S.E.C., 10 Civ. 9141 (RJH), Dkt. 1 (S.D.N.Y.). Altman argued that the SEC
lacked the power to discipline lawyers appearing before it and requested, among other things,
that the SEC’s November 10, 2010 order against him be vacated. Id. United States District
Judge Richard J. Holwell dismissed the action for lack of jurisdiction on March 8, 2011, id., Dkt.
15, and the Second Circuit affirmed on June 12, 2012, id., Dkt. 19. Altman also petitioned the
D.C. Circuit to review the SEC’s order, but did so pro se. The court denied the petition. Altman
v. S.E.C., 666 F.3d 1322, 1324 (D.C. Cir. 2011).
This is not really a conflict in which counsel appears in the same case on behalf of
multiple parties with different interests. Nonetheless, Mandell claims that because of Hoffman’s
divided loyalties, Hoffman chose to shield Altman from potential liability to Mandell’s
detriment. Mandell catalogs a laundry list of events that should have happened; and “if only”
they did, Mandell would have not been convicted. Specifically, Hoffman should have allowed
Mandell to testify at trial and meet with the government, proffer, cooperate, or plead guilty;
Hoffman should have called Altman and others as witnesses; and Hoffman should have more
vigorously cross-examined government witnesses about Altman’s role in the scheme. Many of
the arguments are contradictory and fanciful. Altman, for example, would exonerate Mandell by
inculpating himself; and Mandell would proffer or cooperate, but would not admit guilt.
Additionally, Mandell asserts that Hoffman was ineffective because he did not file an
interlocutory appeal after the Court ruled on Mandell’s motion to dismiss pursuant to the
Supreme Court’s decision in Morrison. This argument is dismissed out of hand because it was
raised on appeal and rejected by the Second Circuit. It does not fare better in the § 2255 Petition.
On February 23, 2016, the Court ordered the government to respond to Mandell’s
Petition. Dkt. 318. On June 2, 2016, the government requested that the Court enter an order that
Hoffman submit an affidavit or affirmation addressing Mandell’s assertions and send Mandell an
informed consent form waiving the attorney-client privilege. 16 Civ. 1186 (S.D.N.Y.), Dkt. 9.
On June 7, 2016, the Court entered the order. Dkt. 321. Mandell’s signed attorney-client
privilege waiver was filed on the docket on July 8, 2016. Dkt. 322. On July 25 and July 26,
2016 respectively, the Government filed its opposition to Mandell’s Petition and Hoffman’s
affidavit addressing the claims in Mandell’s Petition. Dkt. 324, 325, 326. On September 23,
2016, Mandell’s reply, including his affidavit (“Mandell Aff.”), was filed on the docket. Dkt.
On October 20, 2016, the government filed a letter requesting that the Court consider an
e-mail chain in reviewing Mandell’s Petition. 16 Civ. 1186 (S.D.N.Y.), Dkt. 15, refiled as Dkt.
18. The e-mail chain includes e-mails between Altman and Mandell from December 7, 2010. 16
Civ. 1186 (S.D.N.Y.), Dkt. 18-1. In the first e-mail, Altman appears to have attached a
document filed in the Altman Action before United States District Judge Holwell (see page 8,
supra). Altman states: “The attached was filed today. You may find it interesting. It is the
work of my good friend Mitch Stein and I though Jeff [Hoffman] remains involved for good
order.” Id. at 2. Mandell responds: “Congratulations! I will read through it tonight!” Id.
Altman replies: “Argument on our motion for a stay/TRO/etc tomorrow at noon. Prayers
welcome!” Id. And Mandell then says: “I’ll pray hard!” Id. The government contends that this
shows that Mandell was aware of Hoffman’s involvement in representing Altman in connection
with the SEC proceeding. 16 Civ. 1186 (S.D.N.Y.), Dkt. 18. Mandell objects to the Court
considering the e-mails. See Dkt. 330. Given the close relationship between Mandell and
Altman in business over an extended period of time, it is almost inconceivable that Mandell was
not aware of Altman’s SEC proceeding and Hoffman’s role as counsel. The e-mail chain
confirms what appears to be obvious.
Ineffective Assistance of Counsel
A defendant claiming ineffective assistance of counsel in violation of the Sixth
Amendment must show that (1) “counsel’s representation fell below an objective standard of
reasonableness;” and (2) “there is a reasonable probability that, but for counsel’s unprofessional
errors, the result of the proceeding would have been different.” Strickland v. Wash., 466 U.S.
668, 688, 694 (1984). Failure to make either of the two required showings is fatal to a claim of
ineffective assistance of counsel. See id. at 700.
With respect to the first required showing, “a court must indulge a strong presumption
that counsel’s conduct falls within the wide range of reasonable professional assistance . . . .” Id.
at 689. “Judicial scrutiny of counsel’s performance must be highly deferential . . . .” Id. And
the “court should recognize that counsel is strongly presumed to have rendered adequate
assistance and made all significant decisions in the exercise of reasonable professional
judgment.” Id. at 690.
With respect to the second required showing, “[a] reasonable probability is a probability
sufficient to undermine confidence in the outcome.” Id.at 694. “The likelihood of a different
result must be substantial, not just conceivable.” Harrington v. Richter, 562 U.S. 86, 112 (2011).
Conflict of Interest
“A defendant’s Sixth Amendment right to effective assistance of counsel includes the
right to representation by conflict-free counsel.” LoCascio v. United States, 395 F.3d 51, 56 (2d
Cir. 2005). The Second Circuit has identified three types of attorney conflicts of interest: per se,
actual, and potential. Ventry v. United States, 539 F.3d 102, 111 (2d Cir. 2008).
“[A] per se conflict of interest requires automatic reversal without a showing of
prejudice.” United States v. Williams, 372 F.3d 96, 103 (2d Cir. 2004) (internal quotation marks
omitted). The Second Circuit has found per se conflicts of interest “ where trial counsel is not
authorized to practice law and  where trial counsel is implicated in the same or closely related
criminal conduct for which the defendant is on trial.” Id. (internal quotation marks omitted). A
per se conflict does not exist here.
“[A]n actual conflict of interest occurs when the interests of a defendant and his attorney
diverge with respect to a material factual or legal issue or to a course of action.” Id. at 102
(internal quotation marks and emphasis omitted). Prejudice is usually presumed, but the
defendant still must establish that the “conflict adversely affected his lawyer’s performance.”
United States v. Feyrer, 333 F.3d 110, 116 (2d Cir. 2003). The conflict must result in a “lapse in
representation,” i.e., “ that some plausible alternative defense strategy or tactic might have
been pursued, and  that the alternative defense was inherently in conflict with or not
undertaken due to the attorney’s other loyalties or interests.” Williams, 372 F.3d at 106. “With
respect to the substance of the plausible alternative strategy, the defendant need not show that the
defense would necessarily have been successful had it been used, only that it possessed sufficient
substance to be a viable alternative.” Feyrer, 333 F.3d at 116. Moreover, “[t]he term ‘plausible
alternative defense strategy’ does not embrace all possible courses of action open to a defense
attorney; it refers to those which a zealous advocate would reasonably pursue under the
circumstances.” Lopez v. Scully, 58 F.3d 38, 42 (2d Cir. 1995).
“Potential conflicts exist if the interests of the defendant may place the attorney under
inconsistent duties at some time in the future and violate the Sixth Amendment when they
prejudice the defendant.” Ventry, 539 F.3d at 111 (internal quotation marks, citations, and
alteration omitted). “In order to prevail on such a claim, the petitioner must establish both that
counsel’s conduct fell below an objective standard of reasonableness and that but for this
deficient conduct,” there is a reasonable probability that “the result of the trial would have been
different, under the familiar standard established by Strickland v. Washington, 466 U.S. 668,
688, 104 S. Ct. 2052, 80 L.Ed.2d 674 (1984).” See Armienti v. United States, 234 F.3d 820, 824
(2d Cir. 2000); see also United States v. Fulton, 5 F.3d 605, 609 (2d Cir. 1993).
Section 2255 provides that “[u]nless the motion and the files and records of the case
conclusively show that the prisoner is entitled to no relief, the court shall . . . grant a prompt
hearing thereon, determine the issues and make findings of fact and conclusions of law with
respect thereto.” 28 U.S.C. 2255(b). If, however, “it plainly appears from the motion, any
attached exhibits, and the record of prior proceedings that the moving party is not entitled to
relief, the judge must dismiss the motion.” Puglisi v. United States, 586 F.3d 209, 213 (2d Cir.
2009) (quoting Rules Governing § 2255 Proceedings for the United States District Courts, Rule
“To warrant a hearing, the motion must set forth specific facts supported by competent
evidence, raising detailed and controverted issues of fact that, if proved at a hearing, would
entitle him to relief.” Gonzalez v. United States, 722 F.3d 118, 131 (2d Cir. 2013). The
defendant “need establish only that he has a ‘plausible’ claim of ineffective assistance of
counsel, not that he will necessarily succeed on the claim.” Raysor v. United States, 647 F.3d
491, 494 (2d Cir. 2011) (quoting Puglisi, 586 F.3d at 213). A hearing is not required, however,
“where the allegations are vague, conclusory, or palpably incredible.” See Gonzalez, 722 F.3d at
130 (internal quotation marks omitted). And “a district court need not assume the credibility of
factual assertions, as it would in civil cases, where the assertions are contradicted by the record
in the underlying proceeding.” Puglisi, 586 F.3d at 214.
Pro Se Submissions
Because Mandell is pro se, his submissions are “held to less stringent standards than
formal pleadings drafted by lawyers.” See Ferran v. Town of Nassau, 11 F.3d 21, 22 (2d Cir.
1993) (internal citation omitted). The Court reads Mandell’s submissions “liberally, and . . .
interpret[s] them to raise the strongest arguments that they suggest.” Burgos v. Hopkins, 14 F.3d
787, 790 (2d Cir. 1994).
Ineffective Assistance of Counsel – Failure to File an Interlocutory Appeal
The Court must reject Mandell’s argument that Hoffman’s “representation fell below an
objective standard of reasonableness” because he failed to file an interlocutory appeal
challenging the Court’s denial of Mandell’s motion to dismiss based on the Supreme Court’s
decision in Morrison. 4 See Strickland, 466 U.S. at 688. Interlocutory appeals are very rare
because Courts of Appeals generally only have jurisdiction over “final decisions.” See 28 U.S.C.
§ 1291. In criminal cases, the Second Circuit has explained that it “ordinarily lack[s]
jurisdiction to review decisions made before sentencing is complete and a judgment of
conviction has been entered.” United States v. Robinson, 473 F.3d 487, 490 (2d Cir. 2007). And
“the final judgment rule is at its strongest” in criminal cases. Id.
Non-final decisions may be appealed under the “collateral order” doctrine, which permits
review of “a preliminary or interim decision . . . when it (1) conclusively determines the disputed
question, (2) resolves an important issue completely separate from the merits of the action, and
(3) is effectively unreviewable on appeal from a judgment.” Id. However, “the Supreme Court
has interpreted the collateral order doctrine ‘“with the utmost strictness” in criminal cases,’ and
has narrowly limited its application in such cases.” Id. (quoting Midland Asphalt Corp. v. United
States, 489 U.S. 794, 799 (1989) and “noting that the Court has ‘found denials of only three
types of motions to be immediately appealable: motions to reduce bail, motions to dismiss on
double jeopardy grounds, and motions to dismiss under the Speech or Debate Clause.’”).
There is simply no reason to think that the Second Circuit would have entertained an
interlocutory appeal of the Court’s decision on Mandell’s motion to dismiss. Because the appeal
would have been futile, the decision not to file it cannot be considered unreasonable. 5 See
Additionally, Mandell appears to argue Hoffman was ineffective for failing to move the Court pursuant to 28
U.S.C. § 1292(b) for certification of an order for interlocutory appeal. See Petition at 11–12. However, 28 U.S.C.
§ 1292(b) “does not apply in criminal cases.” See United States v. Selby, 476 F.2d 965, 967 (2d Cir. 1973); 28
U.S.C. § 1292(b) (“When a district judge, in making in a civil action an order not otherwise appealable under this
section . . . .” (emphasis added)).
Mandell has also failed to show prejudice given that the Second Circuit did not dismiss any counts in the
Indictment on appeal, and given that there is no basis to conclude that there is a reasonable probability that evidence
of foreign securities transactions would have been excluded from trial. See United States v. Carboni, 204 F.3d 39,
44 (2d Cir. 2000) (“[E]vidence of uncharged criminal activity is not considered other crimes evidence under Fed. R.
Maldonado v. Burge, 697 F. Supp. 2d 516, 541 (S.D.N.Y. 2010) (“The failure to make
demonstrably futile arguments cannot constitute constitutionally ineffective assistance of
Actual Conflict of Interest
Mandell claims that Hoffman had an actual conflict of interest because of his relationship
with Altman. According to Mandell, Hoffman’s conflict resulted in several lapses in
representation: Hoffman did not call Mandell, Altman, or certain other witnesses to testify at
trial; Hoffman did not vigorously cross-examine witnesses about Altman’s involvement in the
scheme; and Hoffman did not allow Mandell to meet with the government, proffer, cooperate, or
It is doubtful that there is any actual conflict here. Altman was not a named party, and
Hoffman did not represent Altman in any action which could be called “related” to the criminal
indictment. Nonetheless, for purposes of ruling on Mandell’s § 2255 Petition, the Court will
assume that Hoffman’s loyalties were divided between Mandell and Altman, and that Mandell
did not waive the conflict of interest, even though it is obvious that Mandell was fully cognizant
of Altman and Hoffman’s relationship. See United States v. Schwarz, 283 F.3d 76, 95 (2d Cir.
2002) (“In most cases where a defendant is faced with a situation in which his attorney has an
actual or potential conflict of interest, it is possible for him to waive his right to conflict-free
counsel in order to retain the attorney of his choice.”); see also United States v. Blau, 159 F.3d
68, 74–75 (2d Cir. 1998). Still, Mandell’s Petition is meritless. He makes his claims with the
precision of a blunderbuss, his arguments a scattered outburst of conflicting and contradictory
Evid. 404(b) if it arose out of the same transaction or series of transactions as the charged offense, if it is
inextricably intertwined with the evidence regarding the charged offense, or if it is necessary to complete the story
of the crime on trial.”).
assertions that do not, viewed either individually or collectively, indicate a lapse in
representation resulting from Hoffman’s supposed conflict.
Hoffman Does Not Cross-Examine Witnesses About Altman’s Role in the
Mandell articulates no plausible defense strategy involving cross-examining witnesses
about Altman’s role in the scheme. Perhaps Mandell wanted to place the criminal blame on
Altman, and so he argues that ZZA owned 9.9% of the General Partner that owned and
controlled Thornwater; Altman was counsel to Thornwater and various holdings companies;
Altman was listed as counsel in every private placement memorandum; and Altman was the
escrow agent for every private placement. See Reply at 25. This, Mandell asserts, meant that
Altman could “control the flow of client invested funds,” and therefore “exercise control over
Grabowski.” Id. Further, Altman allegedly owned and controlled founders’ shares blocks in
Thornwater private placements, and was the “architect” of the Thornwater holdings companies
and private placements. Id. at 25–26.
But so what? This evidence does not in any way undermine or rebut the government’s
overwhelming evidence that Mandell orchestrated the many lies that were told to investors at
both Thornwater and Sky Capital. Mandell says that Altman could exercise control over
Grabowski (whatever that means), but he does not say Altman did so or why this allegation
would be relevant to his defense. Mandell makes no claim that Altman really was the
mastermind behind the scheme, or that he concocted or directed the falsehoods that the brokers
told investors. Furthermore, an attack on Altman might upset the theory of defense that was used
at trial: Mandell spent millions on lawyers to ensure that business was transacted legally.
Instead, the factual assertions Mandell argues are supposedly relevant simply support
what was already presented to the jury: Altman was a participant in the scheme and worked for
its success. And in any event, many of Mandell’s factual assertions were in fact brought out at
trial. See, e.g., Trial Tr. 389–90, 414 (explaining that money for private placements would be
wired into ZZA escrow account); Trial Tr. 429–30 (explaining that either owner of Lisa’s
Incredible Edibles owed Altman money, or Altman put money into the company); Trial Tr. 485
(explaining that Altman was lawyer for Thornwater and Sky Capital). The factual assertions
about Altman are not at all inconsistent with, and do not call into question, the government’s
theory of the case against Mandell. The Court does not see how these factual allegations would
have been helpful to his defense.
Moreover, Hoffman’s detailed cross-examination of witnesses belies Mandell’s claim
that Hoffman shied away from questioning witnesses about Altman. In fact, Hoffman asked two
witnesses whether Altman committed crimes with them. See Trial Tr. 565–66, 2641–42. This
does not in any way suggest that Hoffman sought to protect Altman to Mandell’s detriment.
Mandell consequently fails to establish a plausible claim there was a lapse in Hoffman’s
representation based on his decision not to cross-examine witnesses more aggressively about
Altman’s role in the scheme.
Hoffman Does Not Call Altman at Trial
Mandell fails to plausibly explain how Hoffman’s decision not to call Altman as a
witness amounts to a lapse in representation. He states that “Grabowski and Altman had their
own agenda (Altman needed Grabowski to hide the fact of his own involvement, not Mandell’s)
and probably still does [sic] to this day,” and that “[i]f Altman had testified, he could tell the
truth to these facts and corroborate Mandell’s testimony.” Reply at 32. Hoffman was to get
Altman’s corroboration of Mandell’s position; but also had to attack Altman’s credibility. An
The innuendo here is that but for Hoffman’s divided loyalties, Hoffman could have
elicited testimony from Altman exonerating Mandell at Altman’s expense. This is not an
argument, as much as it is a wish. As discussed above, Mandell offers nothing to suggest that
Altman was really in charge and responsible for the lies told to unwitting investors. In the
absence of factual allegations suggesting that liability could have shifted from Mandell to
Altman, the Court fails to see what plausible alternative defense strategy would have included
Mandell’s defense counsel gratuitously highlighting Altman’s alleged bad acts to the jury. This
is especially true as Mandell argues that Altman’s testimony could have been used to corroborate
his own testimony; stressing Altman’s alleged bad acts would have undercut Altman’s
credibility, discounting any corroborative value his testimony may have had. Further, there is no
indication that Altman would have waived his Fifth Amendment privilege against selfincrimination in responding to questions about crimes he may have committed. See Eisemann v.
Herbert, 401 F.3d 102, 109 (2d Cir. 2005) (“Moreover, if questioned about his culpability for
Robert’s alleged offenses, Henry would have had the protection of the privilege against selfincrimination, and nothing in the record suggests that he was willing to waive his privilege.”).
As a result, Mandell has not established a plausible claim that calling Altman to testify was
“inherently in conflict with or not undertaken due to [Hoffman’s] other loyalties or interests.”
Williams, 372 F.3d at 106.
Hoffman Does Not Call Other Witnesses at Trial
Mandell argues that Hoffman’s decision to not call several witnesses was a lapse in
representation. One investor, Raymond Knox, who purportedly lost over $500,000, said he was
still willing to testify in Mandell’s favor. See Dkt. 329-3. Knox claims that he told Hoffman
about Altman’s involvement: Knox sent funds to the ZZA escrow account; Altman, through
ZZA, “structured all the private placement offerings and directed all the monies;” Altman was a
part owner of Thornwater “and was to oversee and help Grabowski in the operation of the firm;”
ZZA’s name appears in all of the Thornwater private placement memoranda “as counsel and as
escrow agent;” and Altman and Grabowski represented Thornwater, their shareholders, and their
investors in connection with a 2003 transaction wherein Sky Capital agreed to acquire
Thornwater assets in exchange for cash and shares in Sky Capital Holdings. Id. ¶¶ 2, 5, 9.
Knox’s testimony would not have been “inherently in conflict with or not undertaken due
to [Hoffman’s] other loyalties or interests.” Williams, 372 F.3d at 106. His testimony would
have been redundant. A large part of Knox’s peripheral information about Altman was already
in the trial record and cannot reasonably be said to have been the subject of any real dispute.
How, then, would Hoffman have been protecting Altman by not calling Knox? Mandell offers
no plausible explanation. He also does not provide any information about why Hoffman would
have had a conflict in calling any other witness. In fact, Mandell does not explain what the other
witnesses would have testified to, other than suggesting John Morris could have testified about
the propriety of crossing stocks, see Reply at 30, which is unrelated to Altman.
Consequently, Mandell has failed to establish a plausible claim of a lapse in
representation with respect to any uncalled witness.
Hoffman Does Not Call Mandell at Trial
As with the uncalled witnesses, Mandell does not explain how his own testimony would
have been problematic for Hoffman in light of his supposed conflict of interest. The “facts”
relating to Altman that Mandell asserts he told Hoffman about and could have revealed to the
jury include ZZA’s 9.9% ownership in the General Partner of Thornwater; Altman and ZZA’s
role as escrow agent for Thornwater private placements and counsel to Thornwater and the
Thornwater holding companies; Altman and ZZA’s roles as “architects” of Thornwater private
placements; Altman and ZZA’s ownership of shares in Thornwater deals; and Altman and ZZA’s
ability to exert control and influence over Grabowski. See Mandell Aff. ¶¶ 2–5; Reply at 25–26.
As an initial matter, the Court has serious doubts about this argument. First of all, most
of this is not new. Next, the argument is internally contradictory to Mandell’s other arguments.
How could Mandell testify negatively about Altman in light of his argument that he wanted
Altman to corroborate his testimony? Regardless, the substance of what Mandell contends he
told Hoffman he could have said about Altman is insufficient to establish that his testifying
would have been “in conflict with or not undertaken due to [Hoffman’s] other loyalties or
interests.” Williams, 372 F.3d at 106. Mandell’s hypothetical testimony about Altman and ZZA
does not present an issue of divided loyalties. This includes Mandell’s vague assertion that
Altman and ZZA could exert control and influence over Grabowski, as Mandell does not claim
that Altman ever did so or what happened as a result. Moreover, the underlying record shows
that Hoffman did not seek to avoid eliciting incriminating testimony about Altman; instead, he
questioned witnesses about whether they committed crimes with Altman. See Trial Tr. 565–66,
2641–42. There is thus no plausible basis to conclude that Hoffman did not call Mandell to
prevent him from testifying about Altman.
Furthermore, it was Mandell’s choice not to testify. See Brown v. Artuz, 124 F.3d 73, 78
(2d Cir. 1997) (“[T]he decision whether to testify belongs to the defendant and may not be made
for him by defense counsel.”). Mandell argues only that Hoffman “bullied” him out of testifying
(without providing any explanation of what this means). See, e.g., Mandell Aff. ¶¶ 17, 20, 21. It
appears clear that Mandell, not Hoffman, made the decision not to testify. See Petition at 13
(“Hoffman insisted on resting the Defense Case after . . . urging Defendant not to testify . . . .”).
And Hoffman credibly details the reason Mandell chose not to testify. Hoffman Aff. ¶ 8.
Because there is nothing suggesting that Mandell did not knowingly choose not to testify, it
stands to reason that his testifying was not a “plausible alternative defense strategy or tactic [that
Hoffman] might have . . . pursued.” See Williams, 372 F.3d at 106.
Hoffman Does Not Allow Mandell to Meet with the Government, Proffer,
Plea Bargain, or Cooperate
Mandell does not establish a plausible claim that he was not permitted to meet with the
government, proffer, plea bargain, or cooperate as a result of Hoffman’s purported conflict.
Instead, Mandell’s affidavit belies the notion that Mandell would have pleaded guilty, and
consequently, that he would have been able to cooperate. Mandell states: “Had I been faced
with actual evidence of wrongdoing I would have plead to a deal.” Mandell Aff. ¶ 23 (emphasis
It is clear, however, that Mandell would never have considered his precondition to
pleading guilty—that he be “faced with actual evidence of wrongdoing”—satisfied. Even after a
trial where overwhelming evidence of his guilt was introduced, Mandell still maintains his
innocence. See e.g., Mandell Aff. ¶ 17 (“I have no doubt the jury would have acquitted me had I
been given the right to confront my accusers in court.”); Mandell Sentencing Tr. 40 (“[T]he
people that cooperated here, they perjured themselves in front of you. They lied.”); Id. 45
(stating that witnesses “lied and lied” at trial). That Mandell would not have pleaded guilty is
corroborated by Hoffman, who states that he “do[es] not recall any conversations in which Mr.
Mandell expressed interest in pleading guilty. He desired to proceed to trial and believed that he
would be found not guilty.” Hoffman Aff. ¶ 5. Mandell’s limitation on the circumstances under
which he would have pleaded guilty and his continued insistence on his innocence “negate the
notion that [pleading guilty] was a plausible alternative under the adverse effects standard.” See
Armienti v. United States, 313 F.3d 807, 815 (2d Cir. 2002); see also Pepe v. Walsh, 542 F.
App’x 54, 56 (2d Cir. 2013) (summary order) (“[I]t is by no means clear that Pepe would have
accepted a pre-indictment plea bargain if one had been offered, given his repeated claims of
innocence and eventual decision to go to trial.”).
Cooperation therefore would also have been precluded as a plausible alternative. See
Opp’n at 12 (“Cooperating against Altman would have required Mandell to plead guilty and
accept responsibility for his own involvement in this scheme and any other criminal conduct in
which Mandell had ever engaged . . . .”); see also Hoffman Aff. ¶ 5 (“I am also familiar with the
practices of the United States Attorney’s Office for the Southern District of New York, and I
understand that their office policy is to require any potential cooperators to admit their
involvement in all criminal conduct.”). Even if Mandell could have cooperated without pleading
guilty (not a possibility), Mandell still fails to explain how cooperating would have been “in
conflict with or not undertaken due to [Hoffman’s] other loyalties or interests.” Williams, 372
F.3d at 106. There is nothing (other than Mandell’s unsupported speculation) suggesting that
Hoffman was even aware, prior to trial, that the government was interested in Altman. Nor, as
discussed above, would the information Mandell provided Hoffman about Altman present a
problem of divided loyalties. And the Court cannot see anything about the information Mandell
suggests he could have provided that could qualify as substantial assistance. As a result, offering
to cooperate was not a plausible alternative defense strategy, nor was it in conflict with
Hoffman’s loyalties or interests.
For the same reasons that cooperating did not present a problem of divided loyalties,
proffering similarly did not implicate any divided loyalties. Furthermore, nothing Mandell
claims he would have told the government suggests that he could have persuaded the government
not to prosecute. With no real possibility that Mandell would have entered into a plea deal, 6 the
Court cannot see how proffering would have made any defensive sense, especially where it could
have opened Mandell to further criminal exposure.
Mandell also argues that Hoffman did not allow him to meet with the Government “to
discuss their concerns regarding Defendant and Sky Capital,” Petition at 6, “to try and work out
an agreeable solution,” id. at 10, or to “come to terms with the government,” id. To the extent
these arguments imply some course of action other than pleading guilty, cooperating, or
proffering, Mandell does not explain how these so-called defense strategies had any viability.
Consequently Mandell does not plausibly establish any lapse in representation.
Potential Conflict of Interest
Assuming that Hoffman had a potential conflict of interest that Mandell did not waive,
Mandell still fails to establish that Hoffman’s decisions, either standing alone or taken together,
were unreasonable and prejudiced Mandell.
Hoffman Does not Cross-Examine Witnesses About Altman’s Role in the
Scheme, and Hoffman Does Not Call Altman or Other Witnesses at Trial
As described above, the testimony that Mandell suggests Hoffman could have elicited
from witnesses about Altman’s role in the scheme would not have been helpful to Mandell’s
defense against the government’s case; it had no reasonable probability of changing the outcome
of the trial. Similarly, any testimony that Altman might have provided had no reasonable
probability of impacting the jury’s decision, especially given how little credibility he would have
had: the evidence at trial was that Altman committed crimes, including suborning perjury, in
Mandell argues that he would have proffered prior to his indictment but that Hoffman did not advise him to do so
due to his conflict. Reply at 22. But “[t]he Sixth Amendment right of the ‘accused’ to assistance of counsel in ‘all
criminal prosecutions’ is limited by its terms: it does not attach until a prosecution is commenced.” Rothgery v.
Gillespie Cnty, Tex., 554 U.S. 191, 198 (2008) (internal quotation marks omitted).
connection with the scheme; and the government could have vigorously cross-examined Altman
on the SEC’s decision barring him from practicing or appearing before it, see Opp’n at 15.
Beyond his potential testimony about Altman, Knox’s affidavit suggests that he would
have testified that Mandell was upstanding and did not engage in wrongdoing or criminal
activity, despite the fact that Knox lost upwards of $500,000. But one investor not having a
negative experience with Mandell and his companies had no reasonable probability of negating
the substantial evidence introduced at trial of wrongful conduct directed at many other investors.
And Mandell’s contention that Morris would have testified about the propriety of crossing
stocks—a contention that is unsupported by any affidavit—does not suggest that there was any
reasonable probability that the jury’s verdict would have been different. As the government
explained in its summations at trial, the propriety of crossing stocks was not in itself problematic;
the problem was what investors understood the market for Sky Capital stock to be, when in
reality the market was illusory. See, e.g., Trial Tr. 3476, 3780–81. Other than Knox and Morris,
Mandell provides no indication of what other uncalled witnesses might have testified to.
Mandell has thus failed to plausibly establish a reasonable probability that the jury’s
verdict would have been different had Hoffman cross-examined witnesses more vigorously about
Altman’s role, or had Hoffman called Altman, Knox, Morris, or any other witness at trial.
Hoffman Does Not Allow Mandell to Meet with the Government, Proffer,
Plea Bargain, or Cooperate
There is no reasonable probability that Mandell would have pleaded guilty or cooperated:
Mandell states that he would have required evidence of his guilt, and notwithstanding the
abundant evidence of guilt, he still maintains his innocence. Moreover, nothing about the
information Mandell contends he could have provided (that he did not do it; the other guy did)
suggests it would have qualified as substantial assistance. And Mandell has not plausibly
established that had he proffered, there is a reasonable probability that the outcome would have
been any different. In fact, Mandell states that Harrington proffered, see Reply at 17, but
Harrington still was tried and convicted of all charges against him. It is also not unreasonable for
an attorney to recommend that a client not proffer or cooperate where proffering or cooperating
might expose the client to additional criminal liability, the information had no plausible chance
of persuading the government not to prosecute or to provide a 5K1 letter, and the defendant has
no interest in pleading guilty. Finally, with respect to Mandell’s assertion that Hoffman
prevented him from meeting with the government, Mandell does not explain how doing so
outside the context of proffering, pleading guilty, or cooperating, would have had any reasonable
probability of changing the outcome of the proceeding.
Hoffman Does Not Call Mandell at Trial
Mandell’s assertion of ineffective assistance of counsel based on Hoffman’s alleged
failure to call him as a witness fails Strickland’s first test. While Mandell claims that Hoffman
“bullied” him out of testifying, e.g., Mandell Aff. ¶¶ 17, 20, 21, there is no allegation that
Mandell was unaware of his right to testify. See Chang v. United States, 250 F.3d 79, 84 (2d Cir.
2001) (“As we stated in Brown [v. Artuz, 124 F.3d 73 (2d Cir. 1997)], the ‘burden of ensuring
that the defendant is informed . . . of the right to testify . . . is a component of the effective
assistance of counsel.’”); Petition at 13 (“Hoffman insisted on resting the Defense Case after . . .
urging Defendant not to testify . . . .”). And Mandell does not provide any specifics of how
Hoffman was supposedly able to bully him out of testifying. His claim is therefore “highly selfserving and improbable.” Id. at 86. Instead, the Court finds credible Hoffman’s explanation of
why Mandell did not testify. Hoffman states:
I ultimately advised [Mandell] not to testify. I explained that Mr.
Mandell would be required to essentially say that the Government’s
four cooperating witnesses all gave false testimony. Mr. Mandell
would also be cross-examined by the Government and confronted
with recorded phone conversations demonstrating his knowledge of
the fraudulent scheme. When I practiced cross-examining Mr.
Mandell, I did not think that the jury would find his responses to be
credible. Mr. Mandell agreed with my assessment and chose not to
Hoffman Aff. ¶ 8. Consequently, Mandell’s claim lacks merit. “[A] hearing would not offer any
reasonable chance of altering [the Court’s] view of the facts,” and so is unnecessary. See Chang,
250 F.3d at 85–86 (“[A] detailed affidavit from trial counsel credibly describing the
circumstances concerning appellant’s failure to testify . . . was sufficient to support dismissal of
Furthermore, there is no reasonable probability that Mandell’s proposed testimony would
have resulted in a different outcome. As discussed, Mandell’s allegations about Altman’s role
are peripheral and in any event consistent with the evidence at trial. Mandell contends that he
could have additionally testified about: the risk factors identified in the offering documents
provided to investors, who were all sophisticated; the liquidity events on the horizon; the
circumstances around Mandell’s departure from Thornwater; how Mandell started Sky Capital;
UK requirements and laws for marketing and underwriting IPO stock, and trading shares on the
AIM; the propriety of crossing stocks; a recording where Mandell discussed the low likelihood
of a private placement successfully completing an IPO; and Mandell’s ownership of Sky Capital
stock. See Reply, 27–36.
But Hoffman was able to get much of this before the jury during direct, cross, and
summations, and the jury rejected it as a viable defense. See, e.g., Trial Tr. 1641, 1643, 3627
(private placement memoranda explained risks); Trial Tr. 3674, 3677–78 (investors were
sophisticated); Trial Tr. 3094–95; 3739–40 (cross trading is proper); Trial Tr. 3637–40
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