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Michael F. Schulze v. United States of America

September 30, 2011


The opinion of the court was delivered by: David Alan Ezra United States District Judge



After reviewing Petitioner's Motion and the supporting and opposing memoranda, the Court DENIES Petitioner's 28 U.S.C. § 2255 Motion to Vacate, Set Aside, or Correct Sentence. (Doc. # 430.) Further, since Petitioner has not made a substantial showing of the denial of a constitutional right, the Court also DENIES Petitioner a Certificate of Appealability.


On December 27, 2002, a Grand Jury returned a Second Superseding Indictment ("SSI") charging Petitioner Michael F. Schulze ("Petitioner") with the following:

Count One: Conspiracy to distribute and possess with intent to distribute 50 grams or more of methamphetamine, its salts, isomers, and salts of its isomers in violation of 21 U.S.C. §846.

Count Two: Knowing and intentional distribution of 5 grams or more of methamphetamine, its salts, isomers, and salts of its isomers in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B).

Count Three: Knowing and intentional distribution of 50 grams or more of methamphetamine, its salts, isomers, and salts of its isomers in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(A).

Count Four: Criminal forfeiture allegations pursuant to 21 U.S.C. § 853. (Doc. # 111.)

On October 21, 2002, Petitioner moved to suppress tape recorded evidence of his conversations with others, which were made with the help of confidential informant, Steven Olaes. (Doc. # 74.) On that same day, Petitioner also moved to suppress evidence seized from his residence. (Doc. # 75.) Both Motions were denied on November 26, 2002. (Docs. ## 97, 99.) On December 31, 2002, Petitioner filed a Motion for Reconsideration of the Orders denying his Motions to Suppress. (Doc. # 112.) On January 23, 2003, the Court denied Petitioner's Motion for Reconsideration. (Doc. # 128.) The Ninth Circuit affirmed the Court's denial of that Motion. See United States v. Schulze, 156 Fed. Appx. 38 (9th Cir. 2005).

A jury trial began on January 30, 2003. (Doc. # 134.) After eight days of trial, on February 11, 2003, the Jury found Petitioner guilty on Counts One, Two, and Three. (Doc. # 148.) On February 12, 2003, the Jury returned a special verdict finding that the property identified in Count Four either constituted or was derived from proceeds that Petitioner obtained as a result of the conspiracy charged in Count One. (Doc.# 146--47.) After the Court granted the Government's motion to remove two of the items in Court Four, the Jury determined that all the remaining items were subject to forfeiture. (Id.)

On September 2, 2003, Petitioner was sentenced to 360 months imprisonment as to each of Counts One through Three, all counts to run concurrently. (Doc. # 171.) Petitioner was ordered to serve a five-year term of supervised release as to each of Counts One through Three, all terms to run concurrently. (Id.) Petitioner was also ordered to pay a fine of $50,000. (Id.) The sentence was based on a criminal history category level of one and total offense level of 42. (Doc. # 347.) Petitioner received a four-level increase from the base offense level of 38 for being the organizer or leader of the following five sub-distributors: Donald Grimm, Earl Yamada, Susan Fukumoto, Anthony Tabion, and Ralph Byrd. (Id.)

On September 4, 2003, Petitioner appealed his conviction and sentence. (Doc. # 172.) Petitioner advanced the following arguments on appeal:

(1) Schulze's sentence violated his Sixth Amendment right to a jury trial because the Court sentenced him beyond the statutory maximum based on findings not made by a jury beyond a reasonable doubt as required under Apprendi v. New Jersey, 530 U.S. 466 (2000).

(2) The Government intentionally or recklessly omitted material information about confidential informant Steven Olaes from its affidavit in support of a search warrant for Schulze's residence, and therefore the evidence seized from his residence should have been suppressed.

(3) Confidential informant Steven Olaes was not acting under color of law when he recorded the conversations with the targets of the FBI's investigation and therefore the audiotapes should have been suppressed. (See Doc. # 457 at 180--212.) On November 28, 2005, the Ninth Circuit affirmed Petitioner's conviction but remanded his sentence in light of the Supreme Court's intervening decision in Booker. Schulze, 156 Fed. Appx. at 39--40. Pursuant to United States v. Ameline, 409 F.3d 1073, 1084--85 (9th Cir. 2005) (en banc), the Ninth Circuit ordered a limited remand for the purpose of ascertaining whether the sentence imposed by this Court would have been materially different had this Court known that the United States Sentencing Guidelines were advisory. Id. at 40. On remand, this Court determined that it would have imposed the same sentence had it known that the guidelines were advisory and thus affirmed Petitioner's sentence. (Doc. # 347.)

On March 16, 2006, Petitioner filed a Motion for New Trial based on newly discovered evidence. (Doc. # 245.) Petitioner claimed that previously undisclosed evidence regarding Olaes' probationary status during part of the FBI's investigation warranted a new trial. (Id.) On October 4, 2006, this Court denied the Motion for New Trial. (Doc. # 282.) The Ninth Circuit affirmed the Court's denial of that Motion. See United States v. Schulze, 346 Fed. Appx. 268, 269 (9th Cir. 2009).

On May 10, 2007, Petitioner, proceeding pro se, filed a Motion to Reverse Conviction and Dismiss Indictment on the ground that the government engaged in various forms of misconduct prior to and during his trial. (Doc. # 328.) On July 25, 2007, this Court denied the motion on the ground that Petitioner had waived his new arguments regarding government misconduct because he could have raised them in his earlier appeal, but did not do so. (Doc. # 362.) The Court's decision was affirmed on appeal. See Schulze, 346 Fed. Appx. at 269.

On March 21, 2011, Petitioner filed the instant Motion to Vacate, Set Aside, or Correct Sentence pursuant to 28 U.S.C. § 2255 ("Motion"). ("Mot.," Doc. # 430.) On April 8, 2011, Petitioner requested leave to supplement his Motion in order to add an additional subclaim that was inadvertently omitted. (Doc. # 438.) The Court granted that request on April 22, 2011. On June 24, 2011, the Government filed a response. ("Resp.," Doc. # 455.)


The Court's review of a petitioner's motion is provided for by statute: A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence.

28 U.S.C. § 2255. The scope of collateral attack of a sentence under § 2255 is limited and does not encompass all claimed errors in conviction and sentencing. United States v. Addonizio, 442 U.S. 178, 185 (1979). Under § 2255, the court shall hold an evidentiary hearing on a petitioner's motion "unless the files and records of the case conclusively show that the prisoner is entitled to no relief." 28 U.S.C. § 2255(b). The standard for holding an evidentiary hearing is whether the petitioner has made specific factual allegations that, if true, state a claim on which relief could be granted. United States v. Schaflander, 743 F.2d 714, 717 (9th Cir. 1984).

An evidentiary hearing is not required if the petitioner's allegations, "when viewed against the record, do not state a claim for relief or are so palpably incredible or patently frivolous as to warrant summary dismissal." United States. v. Leonti, 326 F.3d 1111, 1116 (9th Cir. 2003). Mere conclusory statements, without supporting evidence, are not sufficient to require a hearing. United States v. Johnson, 988 F.2d 941, 945 (9th Cir. 1993). Although the moving party is not required to detail his evidence, he must "make factual allegations" to establish his right to a hearing. United States v. Hearst, 638 F.2d 1190, 1194 (9th Cir. 1980). The Court has discretion to ascertain whether a claim is substantial before granting a full evidentiary hearing. Sanders v. United States, 373 U.S. 1, 18 (1963). That discretion is limited, however, when a petitioner claims that he or she instructed his or her attorney to file an appeal and the attorney failed to do so. United States v. Sandoval-Lopez, 409 F.3d 1193, 1197 (9th Cir. 2005). In such situations, evidentiary hearings generally are necessary to determine whether the petitioner, in fact, made such an express instruction. See id.

There are also some general rules regarding what kinds of claims can and cannot be raised in a § 2255 petition. For example, a § 2255 petition cannot be based on a claim that has already been disposed of by the underlying criminal judgment and ensuing appeal. As the Ninth Circuit stated in Olney v. United States, 433 F.2d 161 (9th Cir. 1970), "[h]aving raised this point unsuccessfully on direct appeal, appellant cannot now seek to relitigate it as part of a petition under § 2255." Id. at 162; see also United States v. Berry, 624 F.3d 1031, 1038 (9th Cir. 2010) ("[T]he [Supreme Court] has cautioned that § 2255 may not be used as a chance at a second appeal."); United States v. Hayes, 231 F.3d 1132, 1139 (9th Cir. 2000) ("When a defendant has raised a claim and has been given a full and fair opportunity to litigate it on direct appeal, that claim may not be used as basis for a subsequent § 2255 petition.").

Even when a § 2255 petitioner has not raised an alleged error at trial or on direct appeal, the petitioner is procedurally barred from raising an issue in a § 2255 petition if it could have been raised earlier, unless the petitioner can demonstrate both "cause" for the delay and "prejudice" resulting from the alleged error. See United States v. Frady, 456 U.S. 152, 167--68 (1982) ("[T]o obtain collateral relief based on trial errors to which no contemporaneous objection was made, a convicted defendant must show both (1) 'cause' excusing his double procedural default, and (2) 'actual prejudice' resulting from the errors of which he complains."); accord Davis v. United States, 411 U.S. 233, 242 (1973); United States v. Johnson, 988 F.3d 941, 945 (9th Cir. 1993) ("If a criminal defendant could have raised a claim of error on direct appeal but nonetheless failed to do so, he must demonstrate both cause excusing his procedural default, and actual prejudice resulting from the claim of error."); Hammond v. United States, 408 F.2d 481, 483 (9th Cir. 1969) ("Section 2255 may not be invoked to relitigate questions which were or should have been raised on a direct appeal from the judgment of conviction."). To show "actual prejudice," a § 2255 petitioner "must shoulder the burden of showing, not merely that the errors at [her] trial created a possibility of prejudice, but that they worked to [her] actual and substantial disadvantage, infecting [her] entire trial with error of constitutional dimensions." Frady, 456 U.S. at 170.


Petitioner raises four general grounds for relief in the instant Motion:

(1) prosecutorial misconduct, (2) ineffective assistance of counsel, (3) constructive amendment of the indictment, and (4) unlawful use of surreptitiously recorded statements.

I. Alleged Prosecutorial Misconduct

A habeas petition will be granted for prosecutorial misconduct only when the misconduct "so infected the trial with unfairness as to make the resulting conviction a denial of due process." Darden v. Wainwright, 477 U.S. 168, 181 (1986) (quoting Donnelly v. DeChristoforo, 416 U.S. 637, 643 (1974)); see Bonin v. Calderon, 59 F.3d 815, 843 (9th Cir. 1995). To constitute a due process violation, the prosecutorial misconduct must be "of sufficient significance to result in the denial of the defendant's right to a fair trial." Greer v. Miller, 483 U.S. 756, 765 (1987) (quoting United States v. Bagley, 473 U.S. 667, 676 (1985)). Under this standard, a petitioner must show that there exists a "reasonable probability that the result of the proceeding would have been different" absent the alleged impropriety. See Hein v. Sullivan, 601 F.3d 897, 905 n.4 (9th Cir. 2010); see also United States v. Amlani, 111 F.3d 705, 713 (9th Cir. 1997).

A. Opening Statements

In evaluating allegations of prosecutorial misconduct based on improper remarks, Darden instructs that "it 'is not enough that the prosecutors' remarks were undesirable or even universally condemned[,]' [t]he relevant question is whether the prosecutors' comments 'so infected the trial with unfairness as to make the resulting conviction a denial of due process.'" 477 U.S. at 181 (citations omitted). In other words, under Darden, "the first issue is whether the prosecutor's remarks were improper and, if so, whether they infected the trial with unfairness." Tak Sun Tan v. Runnels, 413 F.3d 1101, 1112 (9th Cir. 2005).

Petitioner argues that the prosecution made several improper and prejudicial remarks in its opening statement. (Mot. at 3--6.) First, Petitioner claims that the prosecution's references to Petitioner's "money-laundering scheme" involving his family and his companies, Innovative Investments and New Vision Development Corporation, were improper because there was no evidence to support those statements. (Mot. at 3--4; TR 1 at 114--15.)*fn1 According to Petitioner, since the prosecution knew there was no direct evidence of money laundering or use of "shell corporations," these improper statements were intended to inflame the Jury and show criminal propensity in violation of Rule 404(b) of the Federal Rules of Evidence. (Mot. at 4--5.) Second, Petitioner claims it was improper for the prosecution to tell the Jury in his opening statement that Petitioner's mother "had close to ten accounts at Pear Harbor Federal Credit Union" and that he "[has] no idea why she had so many accounts." (Id. at 6; TR 1 at 125.) Petitioner claims that these statements were improper and misleading because the prosecution knew or should have known, based on its own evidence, that three of these accounts were institutional loans; three were the same Money Market Certificate account; and two were the same IRA account. (Mot. at 6.) According to Petitioner, these improper statements were made in order to appeal to the prejudices of the Jury by implying that something had to be amiss because normal people did not have ten bank accounts. (Id.) Lastly, Petitioner asserts that the prosecution made various other allegedly unsupported statements regarding Petitioner's associations with Mark Arakaki, a gentleman named "Ronnie," Brennen Roberts, and Shane Ahlo. (Id. at 5.)

Even assuming the veracity of these contentions, Petitioner has not demonstrated that these opening remarks "so infected the trial with unfairness as to make the resulting conviction a denial of due process." Darden, 477 U.S. at 181. Indeed, the evidence adduced at trial established that Petitioner operated a substantial and profitable methamphetamine trafficking operation for the five year period preceding his April 2002 arrest. (TR 2 at 36--63, 94--133; TR 5 at 32--109, 112--128.) That evidence included Petitioner's fingerprint on a two ounce bag of methamphetamine that he sold (TR 4 at 141--144; TR 5 at 19), hundreds of thousands of dollars of unexplained cash transactions and wealth (TR 6 at 32--74), Petitioner's recorded admissions of his involvement in a large scale methamphetamine operation (Doc. # 457-2 at 243--291), and testimony of his closest drug dealing workers who identified him as the leader of a major methamphetamine organization that moved hundreds of pounds of "ice" into Hawaii (TR 2 at 27--63, 90--133; TR 5 at 30--52.). Thus, in light of the overwhelming evidence against Petitioner that was presented at trial, there is no "reasonable probability that the result of the proceeding would have been different" had the prosecution not made the allegedly improper remarks in its opening statement. Hein, 601 F.3d at 905 n.4.

B. False Evidence and Testimony

Petitioner next argues that his Due Process rights were violated because the prosecution introduced evidence that it knew, or should have known, was false and misleading. (Mot. at 6--7.) Specifically, Petitioner claims that Government Trial Exhibits ## 87, 90, 91, and 94 contained false and misleading financial information when compared with trial exhibit #83. (Id. at 8.) Those exhibits, which were prepared by FBI Financial Analyst Conrad Ho, contain summaries of various bank, tax, and income records for Petitioner and others associated with him. (Doc. # 436-1 at 52--56; TR 6 at 32--59.) These financial records were obtained by FBI Agent Cindy Maglasang. (TR 3 at 83--95.) According to Petitioner, the trial exhibits prepared by Ho reflect double and triple counted bank deposits, transfers and bank loans as well as inflated deposit amounts. (Id.) Petitioner further argues that the prosecution knowingly elicited false testimony that was based on the allegedly false and misleading financial trial exhibits. (Id. at 9--10.) In particular, Petitioner claims that the prosecution elicited false testimony from Maglasang and Ho regarding the amount of money that went through the various bank accounts at issue in this case. (Id.) Respondent, for its part, contends that the law of the case doctrine forecloses Petitioner's claims regarding the allegedly false and misleading financial trial exhibits. (Resp. at 11.)

"The law of the case doctrine ordinarily precludes a court from re-examining an issue previously decided by the same court, or a higher appellate court, in the same case." United States v. Caterino, 29 F.3d 1390, 1395 (9th Cir. 1994) (quoting U.S. v. Maybusher, 735 F.2d 366, 370 (9th Cir. 1984), cert. denied, 469 U.S. 1110 (1985)). Under this doctrine, a district court will ordinarily refrain from acting if an appellate court previously has issued a decision on the merits of the claim. Id. at 1395. Thus, the Ninth Circuit has long held that "[i]ssues disposed of on a previous direct appeal are not reviewable in a subsequent petition under 2255." Stein v. United States, 390 F.2d 625, 626 (9th Cir. 1968).

On appeal, Petitioner made the very same arguments that he now advances with respect to the Government's trial exhibits ## 87, 90, 91, and 94 and the corresponding testimony from Ho and Maglasang. (See Petitioner's 2008 Opening Appellate Brief at 23--26; see also Petitioner's 2009 Reply Appellate Brief at 13--14.) In his Opening Appellate Brief, which was filed on March 19, 2008, Petitioner asserted that the Government fabricated those trial exhibits and gave false testimony based on those exhibits. (Petitioner's 2008 Appellate Brief at 25--26.) The Ninth Circuit rejected Petitioner's contentions, stating that he "waived his new arguments regarding government misconduct because he could have raised them in his earlier appeal, but did not do so." Schulze, 346 Fed. Appx. at 269 (citing United States v. Thornton, 511 F.3d 1221, 1229 (9th Cir. 2008); United states v. Radmall, 340 F.3d 798, 801--02 (9th Cir. 2003)). Since the claims of false evidence and testimony were resolved on direct appeal, Petitioner may not present those claims in this proceeding. See Olney, 433 F.2d at 162 ("Having raised this point unsuccessfully on direct appeal, appellant cannot now seek to relitigate it as part of a petition under § 2255.").

C. Closing Argument

Petitioner asserts that the prosecution committed reversible error by making various improper remarks during its closing argument. Petitioner identifies four specific instances of alleged misconduct.

First, Petitioner claims that the prosecution improperly vouched for Maglasang's and Ho's testimony by stating that "[w]e have $514,000 rolling into Innovative Investments; . . . 81,000 into Pearl Harbor Federal Credit Union, New Vision Development Corporation 68,000." (Mot. at 10; TR 7 at 49.) This statement does not constitute vouching. "Improper vouching occurs when the prosecutor places the prestige of the government behind the witness by providing personal assurances of the witness's veracity." United States v. Stinson, 647 F.3d 1196, 1212 (9th Cir. 2011). It also occurs "where the prosecutor suggests that the testimony of government witnesses is supported by information outside that presented to the Jury." Id. Here, the prosecution neither provided personal assurances of Maglasang's and Ho's veracity, nor did it suggest that their testimony was supported by outside information. In fact, the prosecution made no comment regarding their credibility, but merely reiterated the amount of various cash transactions based on the evidence presented at trial. These were not improper statements to make in closing argument. See United States v. Gray, 876 F.2d 1411, 1417 (9th Cir. 1995) (stating that in closing arguments, prosecutors are "free to argue reasonable inferences from the evidence"). Accordingly, Petitioner's claim of improper vouching lacks merit.

Second, Petitioner claims that it was improper for the prosecution to tell the Jury that Petitioner's reported income "[d]oesn't even come close to explaining how Mike was able to come up with so much money . . . .There's no explanation for it. There's no explanation in the record whatsoever." (Mot. at 10--11; TR 7 at 49.) According to Petitioner, these statements were improper because they are based on Ho's trial exhibits, which the prosecution allegedly knew to contain exaggerated figures. (Mot. at 10.)

As discussed above, the Ninth Circuit has already rejected Petitioner's contention regarding Ho's allegedly false and misleading trial exhibits on the ground that Petitioner waived this argument by failing to raise it on his first direct appeal. Schulze, 346 Fed. Appx. at 269. Although Petitioner is now challenging the prosecution's closing remarks, his argument is predicated on the contention that Ho's trial exhibits were false and misleading. Since the Ninth Circuit has determined that Petitioner waived that argument, this Court declines to revisit the issue now. See Olney, 433 F.2d at 162.

Third, Petitioner argues that the prosecution made comments that improperly drew attention to Petitioner's failure to testify, in violation of Griffin v. California, 380 U.S. 609, 615 (1965). (Mot. at 11.) Specifically, Petitioner challenges the following statements ...

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