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Shin v. United States

United States District Court, D. Hawaii

June 28, 2017

PATRICK SHIN, Petitioner,
UNITED STATES OF AMERICA, Respondent. Crim. No. 04-00150 SOM


          Susan Oki Mollway United States District Judge


         Defendant Patrick Shin pled guilty with a plea agreement to having made a false statement to the Government in violation of 18 U.S.C. § 1001. He was sentenced in 2006 to three years of probation, which included twelve days of intermittent confinement, and to a $100, 000 fine. Shin now seeks to vacate his conviction more than ten years after judgment was entered. Having long since paid his fine and completed his term of probation and intermittent confinement, he seeks a common law writ of coram nobis or audita querela.

         In his Verified Petition for Writ of Error Coram Nobis, or Alternatively, for Writ of Audita Querela, filed on September 22, 2015, Shin argues that he has recently discovered exculpatory evidence that the Government should have disclosed to him before he entered his guilty plea. Specifically, Shin contends that the Government wrongfully withheld evidence that a Navy engineer involved in the contracting process could not have testified as to the materiality of Shin's false statements. Shin says that, because materiality is an essential element of the false statement charge, his conviction should be vacated.

         Although Shin's original materiality argument was couched in terms of an alleged violation by the Government of its disclosure obligation under Brady v. Maryland, 373 U.S. 83 (1963), Shin has, over time, refocused his materiality analysis. In 2016, months after Shin had filed his Verified Petition, the Supreme Court discussed the materiality standard applicable to a False Claims Act charge in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016). Less than a month later, the Ninth Circuit examined the materiality standard without mentioning Escobar. Rehearing was sought, and, on rehearing, the Ninth Circuit expressly considered Escobar's materiality analysis. See United States v. Lindsey (Lindsey I), 827 F.3d 865 (9th Cir. 2016), rehearing granted and opinion withdrawn by 854 F.3d 1047 (9th Cir. 2017); see also United States v. Lindsey (Lindsey II), 850 F.3d 1009 (9th Cir. 2017). This court gave the parties in the present case an opportunity to discuss the recent materiality case law.

         In his optional supplemental memoranda, Shin argues that Escobar articulates a new standard of materiality that should be retroactively applied to his circumstances, and that Lindsey II confirms this. Particularly with respect to his request for a writ of audita querela, Shin says that, under Escobar, he could have raised a defense to the false claim charge that he could not have availed himself of at the time he pled guilty. Shin reads Escobar as saying that, in the context of a false claim charge, the relevant evidence concerns whether the particular government decision-maker was affected by (or would have been affected by) the false statement, not whether the statement had the propensity to influence a decision. That is, Shin contends that, under Escobar, a false statement is material only if the particular government official in issue subjectively relied on it (or would have relied on it), and that materiality is not viewed objectively. Shin adds that, under the new subjective standard he says Escobar established, a jury would have likely acquitted him of the false statement charge in light of evidence that the Navy official with “ultimate approving authority” for government contracts would have approved the contract in issue even knowing that Shin had made false statements.

         Although Shin says that these arguments also apply to his petition for a writ of coram nobis, he does not specifically analyze Escobar or Lindsey II in the coram nobis context, despite this court's invitation that he do so. Instead, Shin asks this court to allow him to amend his Verified Petition to include a request for coram nobis relief based on Escobar. He signals to this court that, if denied relief in the present order and if also denied a chance to amend his petition, he will reserve these arguments for a motion for reconsideration and an appeal.

         This court denies Shin's petition for a writ of coram nobis and a writ of audita querela. The court also denies Shin's motion to amend his Verified Petition to raise Escobar in the coram nobis context. Having allowed Shin to argue any impact Escobar or Lindsey II may have on his coram nobis argument, this court concludes that it may proceed to determine that impact on the present record. This court further concludes that Shin is not entitled to further discovery or a hearing on his petition.

         The present order replaces and supersedes this court's earlier order denying coram nobis relief and reserving any decision as to audita querela relief. That earlier order, filed on September 1, 2016, preceded the issuance of the Lindsey II opinion and the filing of additional briefs.

         II. BACKGROUND.

         At all times material to the conviction, Shin was authorized to act as an agent on behalf of JHL Construction, Inc., a general contracting company owned by Shin's nephew, James Lee. See ECF No. 91 in Crim. No. 04-00150 SOM, PageID # 249. (All ECF and PageID references are to Crim No. 04-00150, rather than to the companion civil case.)

         In 2003, JHL was awarded a job order contract (“JOC”) by the Navy. JOCs are based on pre-priced construction tasks. The prices typically come from a unit price book. See Id. The Navy's unit price books list average costs that might be higher or lower than the actual costs in a particular local economy. See id., PageID # 250-51. Using the unit prices relied on by a customer such as the Navy, a contractor proposes an appropriate coefficient to apply to the unit prices to cover overhead and profit, thereby arriving at the contract cost. See id.

         JHL anticipated that the unit prices would exceed JHL's actual costs. See id., PageID #s 253-54. Because JHL would make a profit without adding any coefficient, JHL proposed a zero percent coefficient and was awarded a zero coefficient contract. See id.

         Once awarded to a contractor, a JOC allows an agency to approach and negotiate with the contractor directly, as construction needs come up. See id., PageID # 249-54. In August 2003, the Navy asked JHL to provide a proposal under the JOC for the overhaul of Pump # 2, Drydock # 4, at Pearl Harbor Naval Shipyard. See id., PageID #s 254-55. The Navy was under pressure to award a number of work orders by the end of the Government's fiscal year (September 30, 2003), and assigning the Pump # 2 project to JHL's JOC was seen as a quick way to use current year funding. See id.

         JHL provided a proposal for $2, 360, 153, which was forwarded to the Navy's Engineering Department for a technical review of the costs. See id., PageID # 272. Wesley Choy, a mechanical engineer with the Navy's Engineering Department, questioned the costs, which he viewed as high. See id., PageID #s 259-60; ECF No. 100, PageID # 395. The costs were not broken down, and he could not tell how the final number had been reached. See ECF No. 100, PageID # 395. Choy asked the contract administrator, Annette Ching, to get subcontractor quotes from JHL to substantiate JHL's cost proposal. See id.

         On August 26, 2003, JHL submitted a second proposal for the reduced amount of $2, 205, 138. See id., PageID #s 395-96. The second proposal did not include either a line item breakdown of costs or the requested subcontractor quotes. See id., PageID # 396. Choy asked Ching to get the subcontractor quotes from the two proposed subcontractors, HSI Electric, Inc., and Alfred Conhagen, Inc. See id.

         On September 4, 2003, Shin called HSI and asked it to increase its quote by $100, 000, but to invoice JHL the original amount without the $100, 000 markup. See ECF No. 64, ¶ 15. HSI contacted the FBI to inform it of Shin's request. See id.; see also ECF No. 91, PageID # 264.

         As directed by the FBI, HSI then gave Shin the requested quote with the inflated price. See ECF No. 64, ¶ 17; ECF No. 91, PageID # 265. However, instead of submitting this quote to the Navy, Shin submitted HSI's quote from July 10, 2003, which concerned work on Pump # 1. See ECF No. 64, ¶ 17; ECF No. 91, PageID # 264-65. Shin used white-out to alter the $114, 733 price on the July 2003 quote to $314, 733. See ECF No. 64, ¶ 17.

         On September 4, 2003, Shin asked Conhagen to increase its quote by $180, 000, bringing Conhagen's subcontract amount from $377, 260 to $557, 260. See id., ¶ 18. Conhagen provided Shin with the requested quote for $557, 260. See id.

         On September 8, 2003, Shin met with Choy and Ching to give them the altered HSI and Conhagen quotes. See id., ¶ 19; ECF No. 91, PageID # 264. Shin ultimately submitted JHL's best and final offer of $2, 150, 000. See ECF No. 64, ¶ 19; ECF No. 91, PageID # 269-70.

         On September 23, 2003, federal agents executed a search warrant at Shin's business office. See ECF No. 91, PageID # 266. Shin confessed at that time to having submitted altered and inflated figures for the Pump # 2 job, explaining that the real subcontractor quotes would not have supported JHL's cost proposal and would have caused the Navy to question the legitimacy of the proposal. See ECF No. 64, ¶ 20. He said that, while Conhagen had provided an inflated quote as he had requested, HSI's failure to do so right away had caused him to doctor HSI's quote from a previous job. See id.

         The Pump # 2 project did not involve pre-priced tasks listed in the Navy's unit book. For that reason, performing work on Pump # 2 under JHL's zero coefficient JOC did not allow JHL to recover any overhead or profit. Shin said the inflated subcontractor quotes were his way of recovering overhead and profit. See id.

         The Government charged Shin with having made a false statement to the Government. See ECF No. 1. On April 21, 2004, pursuant to a plea agreement, Shin pled guilty to that charge. See ECF No. 8. On March 8, 2006, Shin was sentenced to three years of probation, which included twelve days of intermittent confinement, and a fine of $100, 000. See ECF No. 62, PageID #s 140-43.

         During sentencing proceedings, Shin argued that the Pump # 2 job was not pre-priced and therefore had been improperly assigned under JHL's zero coefficient JOC, depriving JHL of a chance to recover overhead and profit. See ECF No. 99, PageID #s 337-40. Shin contended that he had altered the subcontractor quotes only to recover a reasonable profit on the job. See id., PageID #s 340-41. He denied any malicious intent, but acknowledged that the way he had handled the situation was wrong. See id., PageID #s 342-43, 372. This court determined that “there was clearly an intent to deceive, ” see id., PageID # 352, and called the offense “one of these dishonesty kinds of crimes, ” see id., PageID # 368, but imposed a sentence that reflected the court's determination that the Government had failed to prove that Shin had intended to cause a loss. See id.

         After he was sentenced, Shin reached out to Choy several times to talk about Choy's role in the prosecution and to ask him for a written statement. See ECF No. 91, PageID # 271. Choy originally said that Government lawyers had told him not to provide any such written statement without approval from the U.S. Attorney's Office. See id., PageID #s 271-72. Eventually, in approximately April 2014, Choy provided Shin with a typed, unsigned “clarification” statement regarding his role in the contracting process. See id., PageID # 272.

         Choy's “clarification” statement includes the following points: 1) he recalled having stated at a meeting with Shin in 2003 that he understood that Shin needed to “roll” overhead and profit into the line items, given the zero coefficient contract, but that that was a contractual rather than technical issue; 2) imposing a zero coefficient contract on JHL was not fair or reasonable; 3) Choy was surprised to hear that the project had a zero coefficient; and 4) Choy had turned the issue over to the contracting officer as the person authorized to resolve the matter. See ECF No. 91-2, PageID # 307.

         In May 2015, Shin spoke with Choy regarding Choy's communications with “the Prosecutor and the Prosecutor's investigators.” See ECF No. 91, PageID # 276. Without telling Choy, Shin taped the conversation. See ECF No. 102-3, PageID #s 470-91. When Shin asked Choy whether he had communicated to the Government personnel any of the points made in his April 2014 “clarification” statement, Choy allegedly stated that he had told the prosecutor and the prosecutor's investigators that he did not have the authority to decide whether JHL needed to be awarded extra money in the zero coefficient contract to cover its legitimate and reasonable overhead and profit. See ECF No. 91, PageID #s 277-78. Choy also allegedly told Shin: 1) the prosecuting authorities “put the gun” on him regarding his authority to decide the zero coefficient issue; 2) the prosecuting authorities “hid” the fact that Choy was not authorized to deal with the zero coefficient issue; 3) the prosecuting authorities only “heard what they wanted to hear to make their case”; and 4) a declaration that the prosecuting authorities had had Choy sign was “sneaky” and “twisted” the facts he had given them. See id.

         On September 22, 2015, Shin moved for a writ of coram nobis or, in the alternative, audita querela. The motion sought (1) the vacating of Shin's federal criminal conviction on one count of False Statement pursuant to 18 U.S.C. § 1001(a)(3); and (2) leave to withdraw his prior guilty plea in this case. See id., PageID # 243.

         Shin filed a motion for leave to depose Choy and Ching. See ECF No. 105. This court denied Shin's discovery request to the extent it supported his petition for a writ of coram nobis, but noted that it was premature for Shin to seek discovery in aid of a writ of audita querela because a writ of audita querela is a remedy of last resort, and his request for a writ of coram nobis was still pending. See ECF No. 117, PageID #s 600-01. This court thus deferred any ruling on Shin's discovery request insofar as it was brought in aid of obtaining a writ of audita querela. See id., PageID # 601.

         On September 1, 2016, this court denied Shin's petition for a writ of coram nobis and invited Shin to submit an optional supplemental memorandum regarding his alternative request for a writ of audita querela. See Order Denying Defendant's Petition for Writ of Error Coram Nobis, and Inviting Supplementation of Alternative Petition for Writ of Audita Querela, ECF No. 126, PageID # 651. This court again deferred any ruling on Shin's discovery request to the extent it related to his request for a writ of audita querela. See id.

         Shin's optional supplemental memorandum argues that, in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016), the Supreme Court set forth a new definition of materiality that is retroactive and that provides Shin with a defense that was not available to him at the time judgment was entered. See Shin's Supplemental Memorandum Regarding His Motion for Writ of Audita Querela and Motion to Amend Petition, ECF No. 135, PageID #s 746-50. Shin asserts that, given this new definition, his conviction should be vacated as defective. See Id. Specifically, he contends that Escobar creates a new subjective materiality standard for false statement claims, replacing the former objective materiality standard. See id., PageID #s 746-49. Shin says that, under this new standard, his lies were immaterial if the Government would have awarded the contract to him even knowing that his subcontractor quotations were inflated. See id., PageID #s 746-47, 751-53.

         The Government counters that Escobar did not change the law relating to materiality and thus did not create a legal defect in Shin's conviction. See Government's Opposition to Shin's Motion for Writ of Audita Querela, ECF No. 136, PageID # 757. The Government contends that Escobar “simply applied the accepted definition [of materiality] to a particular context.” See id., PageID # 760.

         In responding to the Government's opposition, Shin submitted a declaration by Robert Hokama, who allegedly had the “ultimate” authority to approve the contract. Hokama “would have approved the contract even if aware of SHIN's alteration of the subcontractor bids.” See Responding Memorandum Regarding Shin's Motion for Writ of Audita Querela, ECF No. 139, PageID #s 776-77. Shin points to Hokama's statement as “very strong evidence” under Escobar that Shin's false statements were not material. See id., PageID # 777.

         From 1997 to 2004, Hokama was the Director of Procurement Operations Division at Pearl Harbor responsible for contracting activity relating to the procurement for construction and maintenance of naval facilities. See Declaration of Robert T. Hokama, ECF No. 139-1, PageID # 780. He supervised Annette Ching and was responsible for negotiating and recommending the contract awarded to JHL in 2003. See id., PageID # 781. Hokama suggests that Ching did not follow certain procedures necessary to awarding contracts and states that he was “the ultimate decision-maker regarding whether to award the Contract or not” to JHL and Shin. See id., PageID #s 781-82. Hokama further states,

I would have considered Shin's alteration of the subcontractor quotes as his effort to put JHL's proposal in a form appropriate for consideration and approval by the Government considering the Government's choice of a JOC for the Contract, so his alteration of the subcontractor quotes would not have been material to me. This way, the Contract would have been awarded at a fair price to both the Government and JHL, and the funding for the Contract would not have been lost.
. . .
[Choy's] Government Estimate was prepared with a contract coefficient, and JHL's best and final offer, including the altered subcontractor quotes, was very close to the amount of the Government Estimate. This is also a reason why the altered subcontractor bids, which contained amounts covering overhead and profit because of the task order's out-of-scope nature, would not be material to my decision to award the Contract to JHL as its best and final offer.

See id., PageID #s 782-83.

         On November 9, 2016, this court stayed its ruling on the audita querela issue pending the disposition of the rehearing motion before the Ninth Circuit in United States v. Lindsey. See ECF No. 146. Following the issuance of the Lindsey II opinion, this court invited the parties to file memoranda “addressing the new Lindsey decision and its impact, if any on Mr. Shin's petition (whether in the coram nobis or the audita querela context, or both).” See ECF No. 150.

         Just as they had dueling positions as to Escobar, the parties disagree on how to read Lindsey II. According to Shin, a “subjective standard should now apply to ‘materiality'” pursuant to Lindsey II. ECF No. 157, PageID # 865. Shin says that Escobar stands for the proposition that “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” Id., PageID # 866. Because Hokama would have approved JHL's proposal even had he known of the inflated subcontractor quotes, Shin says his conviction should be vacated. Id., PageID #s 865, 870-72.

         Shin submits yet another declaration from Hokama, this one noting that Hokama's certificate of appointment “stated no limitation on the scope of [his] authority, other than limitations contained in applicable law or regulation.” See Supplemental Declaration of Robert T. Hokama, ECF No. 157-1, PageID # 873. As the “designated contracting officer with highest authority for NAVFAC, ” he says that he “enjoyed a wide latitude to exercise business judgment.” Id., PageID # 874. Hokama further states, “The U.S. Government is not one monolithic entity which decides contracting issues uniformly across every aspect of the procurement process.” Id. He “would have approved of the JHL Pump 2 contract even with knowledge that Mr. SHIN provided altered subcontract bids and would not have considered the alterations by Mr. Shin ‘material'.” Id., PageID # 875.

         The Government points out that Shin offers no evidence of a systemic practice of ignoring the use of altered documents or a contractor's stated costs in determining whether bid prices are fair and reasonable. ECF No. 156, PageID # 861.

         III. ANALYSIS.

         A. Writ of Coram Nobis.

         The 1946 amendments to Federal Rule of Civil Procedure 60(b) expressly abolished several common law writs, including the writ of coram nobis. In United States v. Morgan, 346 U.S. 502, 511 (1954), the Supreme Court held that district courts still retain limited authority to issue common law writs such as writs of coram nobis and audita querela in collateral criminal proceedings.

         These common law writs survive “only to the extent that they fill ‘gaps' in the current systems of postconviction relief.” United States v. Valdez-Pacheco, 237 F.3d 1077, 1079 (9th Cir. 2001). Such writs are not available when the claims raised would be cognizable in petitions under 28 U.S.C. § 2255.

         A writ of coram nobis is “a highly unusual remedy, available only to correct grave injustices in a narrow range of cases where no more conventional remedy is applicable.” United States v. Riedl, 496 F.3d 1003, 1005 (9th Cir. 2007). It is distinguishable from a habeas petition, which is available only when convicted defendants are in “custody.” See Hensley v. Municipal Court, 411 U.S. 345, 349 (1973); Jones v. Cunningham, 371 U.S. 236, 243 (1963). A writ of coram nobis allows a petitioner to attack a conviction when the petitioner has already finished his sentence and is no longer in custody. See McKinney v. United States, 71 F.3d 779, 781 (9th Cir. 1995).

         To qualify for coram nobis relief, a petitioner must establish all of the following: (1) a more usual remedy is not available; (2) valid reasons exist for not having attacked the conviction earlier; (3) there are adverse consequences from the conviction sufficient to satisfy the case or controversy requirement of Article III; and (4) the error is of the most fundamental character. Hirabayashi v. United States, 828 F.2d 591, 604 (9th Cir. 1987). “Because these requirements are conjunctive, failure to meet any one of them is fatal.” Matus-Leva v. United States, 287 F.3d 758, 760 (9th Cir. 2002).

         1. Shin Satisfies the First Three of the Four Requirements for the Issuance of a Writ of Coram Nobis.

         Shin satisfies three of the four requirements for the issuance of a writ of coram nobis.[1]

         First, a more usual remedy is not available here. Hirabayashi, 828 F.2d at 604. Shin has completed his sentence and cannot seek relief under § 2255. See 28 U.S.C. § 2255 (providing that a “prisoner in custody . . . may move the court which imposed the sentence to vacate, set aside or correct the sentence”).

         Second, Shin has suffered reputational, professional, and social consequences as a result of his criminal conviction. See ECF No. 91, PageID # 285. He states in his Verified Petition that he has lost business opportunities because of his conviction and that newspaper articles published as recently as August 2015 continue to refer to his felony conviction. See id., PageID # 297. The Ninth Circuit has “repeatedly affirmed the presumption that collateral consequences flow from any criminal conviction.” Hirabayashi, 828 F.2d at 606.

         Third, Shin has valid reasons for not having attacked his conviction earlier. Although a petition for a writ of coram nobis is not subject to a statute of limitations, the petitioner must show that there were valid reasons that the conviction was not attacked earlier. See Id. at 604-05. This requirement upholds a court's gate-keeping in barring claims that are unjustifiably late. Shin's petition is based on allegedly exculpatory statements that Choy made to the Government, but that Shin only learned of during a conversation with Choy in May 2015. See ECF No. 91, PageID #s 294-95. Shin filed his petition in September 2015. See id., PageID # 305. To the extent Shin relies on Escobar ...

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