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KOWALCZYK v. UNITED STATES

August 21, 1996

CHESTER KOWALCZYK, Petitioner,
v.
UNITED STATES, Respondent.



The opinion of the court was delivered by: SPATT

 SPATT, District Judge:

 Presently before the Court is the motion of the petitioner, pro se Chester Kowalczyk ("Kowalczyk" or the "petitioner"), for a writ of habeas corpus with this Court pursuant to 28 U.S.C. § 2255. *fn1" He bases his claim on the following: (1) ineffective assistance of counsel; (2) erroneous jury instructions; (3) denial of due process; (4) abuse of discretion in evidentiary rulings; (5) unconstitutionality of the underlying criminal statute pursuant to which he was convicted; and (6) the Government's failure to disclose Brady material.

 On January 22, 1990, the petitioner, who was tried under an eight count indictment, was convicted by a jury of six counts of altering vehicle identification numbers ("VINs") in violation of 18 U.S.C. § 511, one count of tax evasion in violation of 26 U.S.C. § 7201 and one count of making a false statement in a tax return in violation of 26 U.S.C. § 7206(1). The tax fraud conviction was later dismissed as a lesser included offense of the tax evasion conviction. The petitioner was subsequently sentenced to six concurrent five year terms of imprisonment on the six counts of altering VINs and a $ 20,000 fine. On appeal, to the Second Circuit, Kowalczyk argued that: (1) there was insufficient evidence to convict him; (2) the district court's charge with respect to the VIN alteration counts was erroneous; (3) the district court erred in refusing to instruct the jury that the defendant's good faith belief that he had filed a correct tax return negated the necessary element of wilfulness inherent in the conviction; and (4) there was insufficient evidence of proper venue. The conviction was affirmed on appeal by writ of mandate dated May 15, 1991. United States v. Kowalczyk, 90-1678 (June 26, 1991). A subsequent motion to reduce the sentence was filed on January 27, 1992 pursuant to Fed. R. Crim. P. 35(b). The motion was denied by order dated November 24, 1992 and affirmed on March 15, 1994.

 In addition to filing his original moving papers seeking habeas relief, Kowalczyk has also filed motions for summary judgment in his favor and for bail pending adjudication of the habeas petition, as well as a motion for contempt against the former New York City Police Commissioner William Bratton for failure to comply with a subpoena and produce certain discoverable material.

 I. Background

 The crux of the Government's case was that Kowalczyk was involved in a scheme in which he would obliterate or alter VINs in violation of federal law. All vehicles have their own unique VINs, a seventeen digit number attached and stamped on the vehicle in several places by the auto manufacturer. At the factory, a public VIN plate is affixed on the dashboard on the drivers side and a "confidential" VIN is stamped on the underside or engine.

 As part of his criminal enterprise, Kowalczyk would purchase badly damaged vehicles ("Salvage Vehicles") at a low cost from Tech-Cor, Inc. ("Tech Cor"), a New Jersey salvage business. Tech-Cor is an insurance company salvage yard that auctions vehicles which have been damaged by fire, theft or collision and whose owners have been paid on a total loss basis. After paying the total loss to the insured car-owner, the insurance company obtained title to the vehicles, which are then auctioned off at Tech-Cor in a substantially damaged condition. The defendant would then obtain a vehicle in good condition similar to the Salvage Vehicle with respect to make, model and year (the "Similar Vehicle").

 After the defendant purchased a Salvage Vehicle, the public VIN plate was removed and then transferred to the Similar Vehicle. The Similar Vehicle's confidential VIN then would be obliterated or altered. There are at least three separate steps in the VIN alteration process: (1) removal of the public VIN from the Salvage Vehicle; (2) affixation of the public VIN to the Similar Vehicle; and (3) obliteration of the confidential VIN on the Similar Vehicle. According to the evidence at trial, after the alterations described above were performed, the defendant sold the Similar Vehicle at a higher price than the cost of the salvaged vehicle.

 Detective Thomas Knobel testified that he, among others, inspected the confidential and public VINs of approximately twenty Similar Vehicles, including the vehicles referred to in Counts one through six of the indictment. Tr. 176-77, 178. As part of the examination, Detective Knobel examined the "rail" or underside of the vehicle and the engines where the confidential VINs are stamped. Tr. 178. In each case, Detective Knobel personally observed that the original confidential VIN had been "ground down," "hammered off," "obliterated" or "restamped." Tr. 183, 185, 189, 194-95, 197-99, 209. In three cases, through chemical restoration or other means, Knobel was able to ascertain the true confidential VIN of the Similar Vehicle. Tr. 189-91, 195-96, 198. Significantly, in these three cases the true confidential VINs differed from the public VINs, and in one case, the evidence demonstrated that the vehicle bearing the true confidential VIN had been reported missing or stolen. Tr. 665-69. The proof showed that this scam enabled the petitioner to sell these procured Similar Vehicles containing the title history and paperwork of the Salvage Vehicles.

 The evidence further established that in 1985 Kowalczyk purchased approximately forty-five cars from Tech-Cor at a total cost of $ 58,055. He was able to resell approximately twenty-five cars that year for the sum of $ 220,900 making a profit of $ 152,283, which was not disclosed on his tax returns.

 II. Discussion

 As stated above, Kowalczyk makes the following arguments in support of his petition for a writ of habeas corpus: (1) ineffective assistance of counsel; (2) erroneous jury instructions; (3) denial of due process; (4) abuse of discretion in evidentiary rulings; (5) unconstitutionality of the underlying criminal statute pursuant to which he was convicted; and (6) the Government failed to disclose Brady material.

 As recently stated by the Second Circuit, "because requests for habeas corpus relief are in tension with society's strong interest in the finality of criminal convictions, the courts have established rules that make it more difficult for a defendant to upset a conviction by collateral, as opposed to direct, attack." Ciak v. United States, 59 F.3d 296, 301 (2d Cir. 1995), citing, United States v. Frady, 456 U.S. 152, 165, 71 L. Ed. 2d 816, 102 S. Ct. 1584 (1982). As a result, prisoners seeking habeas corpus relief pursuant to section 2255 must show both a violation of their constitutional rights and "substantial prejudice" or a "fundamental miscarriage of justice." Ciak, 59 F.3d at 301.

 Further, in section 2255 proceedings, the Supreme Court has recognized the rule of "procedural default: [that prisoners] cannot assert claims they failed to raise at trial or on direct appeal unless they can show 'cause' for the default and 'prejudice' resulting from it." Id. at 302, citing, Wainwright v. Sykes, 433 U.S. 72, 87, 53 L. Ed. 2d 594, 97 S. Ct. 2497 (1977); see also Reed v. Farley, 512 U.S. 339, 129 L. Ed. 2d 277, 114 S. Ct. 2291, 2300 (1994) ("the general rule is that the writ of habeas corpus will not be allowed to do service for an appeal . . . . Where the petitioner -- whether a state or federal prisoner -- failed properly to raise his claim on direct review, the writ is available only if the petitioner establishes 'cause' for the waiver and shows 'actual prejudice from the alleged . . . violations'").

  However, the traditional procedural default rule generally will not apply to ineffective assistance of counsel claims where a petitioner was represented by the same attorney at trial and on direct appeal or where such claims depend on matters outside the scope of the record on direct appeal. Billy-Eko v. United States, 8 F.3d 111, 114 (2d Cir. 1993). This rule is based on two policy considerations. First, in many instances, the accused is represented by the same counsel during trial and on appeal. As such, it would be unrealistic to expect counsel on appeal to vigorously pursue an ineffective assistance of counsel claim. Id. at 114. Second, the resolution of ineffective assistance of counsel claims often requires evidence outside the record on appeal because such claims are often based on alleged errors of omission which are difficult to perceive from the record. Id. Examples of such errors include the failure to call a witness, introduce certain evidence or a conflict of interest. Id.

 The exception to the general "cause" and "prejudice" rule as set forth in Billy-Eko also contains an exception. Specifically, in the narrow circumstances where: (1) the petitioner was represented by new counsel on the direct appeal; and (2) the claim is based solely on the record on appeal, the exception to the general procedural bar rule will not apply. Id. at 114-15, citing, United States v. Phillips, 914 F.2d 835, 846 (7th Cir. 1990).

 A. Ineffective assistance of counsel

 Kowalczyk's petition states two alternative theories alleging the ineffective assistance of counsel. Initially, he argues that his trial attorney, Felix T. Gilroy ("Gilroy") suffered from a conflict of interest based on reasons set forth below. Alternatively, the petitioner contends that he was prejudiced by the ineffective assistance of counsel as a result of Gilroy's failure to raise certain issues either at trial or on appeal.

 In general, to state a valid claim for ineffective assistance of counsel, the petitioner must establish that "counsel's representation fell below an objective standard of reasonableness," and that the defendant was prejudiced as a result of such conduct. Strickland v. Washington, 466 U.S. 668, 688, 692, 80 L. Ed. 2d 674, 104 S. Ct. 2052 (1984); United States v. Hansel, 70 F.3d 6, 8 (2d Cir. 1995). With respect to the conduct of counsel, the petitioner must overcome the presumption that, under the circumstances, the challenged action might be considered sound trial strategy. Strickland, 466 U.S. at 689; Hansel, 70 F.3d at 8. As to prejudice, the petitioner must establish that but for the counsel's "unprofessional errors," the result of the proceeding would have been different. Strickland, 466 U.S. at 694; Hansel, 70 F.3d at 8.

 1. Conflict of interest

 Kowalczyk's first ineffective assistance of counsel argument is based on his trial counsel's the alleged conflict of interest. According to the petitioner, Gilroy is a former law partner of Louis E. Diamond ("Diamond"). Diamond was also Kowalczyk's former business partner in an auto repair business under investigation for criminal activity. Further, Diamond's associate, Louis E. Rosenthal, Esq. ("Rosenthal") who represented Diamond in his divorce settlement, maintained an adversarial relationship with Gilroy who represented Diamond's wife in those divorce proceedings.

 According to the petitioner, he met Diamond in 1983 at an auto show, as the result of which the two became friends and Diamond employed Kowalczyk to restore automobiles on numerous occasions. In return for his services, Diamond allegedly agreed to provide the petitioner with unlimited legal services. This relationship continued, with Diamond acting as "silent partner" supplying money to purchase old automobiles for restoration, repair and resale. In addition, Diamond would supply necessary auto parts which he would obtain from another client, Edward Janis, the proprietor of an auto repair shop, Wood Auto Body. On several occasions Diamond recommended that Kowalczyk utilize Janis' repair services. According to Kowalczyk, Janis was placed under government investigation in 1987 for unidentified "auto crimes." Although Diamond was representing Janis in the investigation, Janis never went to trial as he took his own life.

 When Kowalczyk came under investigation in 1987, Diamond recommended the legal services of Rosenthal, whom Diamond had used in his prior divorce proceedings. Kowalczyk then retained Rosenthal and paid the sum of $ 10,000. In 1988, contrary to Rosenthal's opinion, Kowalczyk was indicted with the crimes for which he was eventually convicted. Although the subsequent events are not entirely clear, apparently dissatisfied with Rosenthal's representation, Kowalczyk hired Diamond's former partner Felix Gilroy to represent him, and upon Gilroy's advice, decided to take the case to trial. According to the petitioner, Gilroy's "veiled interest" in his representation are best demonstrated by the following events:

 
1. Diamond had telephoned Gilroy's secretary and told her that if the Diamond-Kowalczyk business relationship was disclosed or Gilroy attempted to obtain any of the retainer paid to Rosenthal, Diamond would inform Gilroy's wife that he was having an affair. Gilroy's secretary later relayed the conversation to Kowalczyk's wife.
 
2. At trial, Gilroy did not permit Kowalczyk "to testify to enter his business records into evidence," although the jury was permitted to view them during the trial testimony of the petitioner's wife.

 Further, on appeal, according to the petitioner, Gilroy failed to present issues regarding erroneous jury instructions, his right to testify, the exclusion of the business records, an alleged defect in the indictment, and a constitutional challenge to 18 U.S.C. § 511, the merits of which are presented in this petition for relief.

 The Supreme Court has recognized that the Sixth Amendment right to counsel includes "a correlative right to representation that is free from conflicts of interest. Wood v. Georgia, 450 U.S. 261, 271, 67 L. Ed. 2d 220, 101 S. Ct. 1097 (1981), citing, Cuyler v. Sullivan, 446 U.S. 335, 64 L. Ed. 2d 333, 100 S. Ct. 1708 (1980); Holloway v. Arkansas, 435 U.S. 475, 55 L. Ed. 2d 426, 98 S. Ct. 1173 (1978). As the Second Circuit has reiterated in a number of opinions, a "defendant has suffered ineffective assistance of counsel in violation of the Sixth Amendment if his attorney has (1) a potential conflict of interest that resulted in prejudice to the defendant, or (2) an actual conflict of interest that adversely affected the attorney's performance." United States v. Levy, 25 F.3d 146, 152 (2d Cir. 1994); see also Ciak, 59 F.3d at 301-03 (applying Levy to section 2255 petition). In order to "make out a Sixth Amendment violation based on an attorney conflict of interest, petitioner must demonstrate that a 'plausible alternative defense strategy . . . might have been pursued' and that such strategy was 'inherently in conflict with or not undertaken due to the attorney's other loyalties or interests.'" Ciak, 59 F.3d at 307, quoting, Winkler v. Keane, 7 F.3d 304, 309 (2d Cir. 1993), cert. denied, 128 L. Ed. 2d 79, 114 S. Ct. 1407 (1994).

 Further, where the district court is sufficiently apprised of a conflict of interest, the court has an obligation to further investigate the issue. Levy, 25 F.3d at 153; see also Ciak, 59 F.3d at 301-02. If the inquiry discloses either an actual or potential conflict, the court must either: (1) disqualify the attorney where "no rational defendant would knowingly and intelligently desire the conflicted lawyer's representation;" or (2) where there is a lesser or potential conflict the court should obtain a knowing and valid waiver of the right to have a "non-conflicted lawyer." Levy, 25 F.3d at 153. Ignoring a possible conflict of interest will result in an automatic reversal. Ciak, 59 F.3d at 301, citing, Levy, 25 F.3d at 153.

 Addressing the latter test first, the Court finds that the petitioner has failed to establish an actual conflict of interest adversely affecting counsel's performance. The Second Circuit has generally limited an actual conflict of interest situation to one where the attorney is either unlicensed, Solina v. United States, 709 F.2d 160, 167 (2d Cir. 1983), or has been involved in the wrongful conduct related to the crime with which his client is charged. United States v. Aiello 900 F.2d 528, 531 (2d Cir. 1990) (refusing to extend the per se actual conflict rule beyond situations in which defendant was represented by as person unauthorized to practice law or where the attorney might be implicated in the defendant's wrongdoing); United States v. Jones, 900 F.2d 512, 519 (2d Cir.), cert. denied, 498 U.S. 846, 112 L. Ed. 2d 99, 111 S. Ct. 131 (1990); see also Bellamy v. Cogdell, 974 F.2d 302, 307-08 (2d Cir. 1992) (en banc), cert. denied, 507 U.S. 960, 113 S. Ct. 1383, 122 L. Ed. 2d 759 (1993) (rules regarding per se violations of Sixth Amendment right to counsel are to be "narrowly applied"); United States v. Cancilla, 725 F.2d 867, 870 (2d Cir. 1984) (finding a conflict of interest where the attorney might be implicated in the defendant's unlawful activity). The rationale underlying this rule is that fear of prompting a government investigation of the attorney's own conduct would prevent the attorney from mounting a vigorous defense. Id.

 Applying this standard the Court finds that Gilroy did not harbor actual conflicting interests. The conflict of interest alleged by the petitioner is based on an alleged telephone call made by Diamond to Gilroy's secretary and Gilroy's decision to advise Kowalczyk not to testify. However, as the Government notes, the petitioner does not contend that Gilroy was either informed of the threat by his secretary or that he reacted to it in any way. Rather, Kowalczyk asserts in conclusory fashion that "to deduce otherwise is convoluting the facts as presented." Further, the only support for this proposition is an affidavit executed by Kowalczyk's wife in 1994, attesting to a conversation with Gilroy's secretary two years earlier, in 1992, which recounted a conversation from 1989. As a result, the Court finds that these incomplete accusations of questionable credibility are insufficient to establish an actual conflict of interest. See Aiello, 814 F.2d at 113-14 (a hearing pursuant to a 2255 petition is unwarranted where such a request is based on "airy generalities, conclusory assertions and hearsay [which] would [not] be admissible . . . at a hearing").

 In reaching this conclusion, the Court notes that if Kowalczyk's trial counsel had been Diamond, with whom he shared a business interest, the issue would have been much closer. However, neither Diamond nor Rosenthal were involved in the trial aspect of this litigation. Accordingly, any conflict of interest which involved those persons is irrelevant.

 With respect to the second test, the petitioner must establish a potential conflict which resulted in his being prejudiced. See Strickland, 466 U.S. at 688, 694. Assuming a potential conflict of interest exists by virtue of Diamond's threats to advise Gilroy's wife of Gilroy's alleged extra marital affair, Kowalczyk argues that he was prejudiced because his counsel precluded him from testifying in his own behalf. While the Court recognizes, that at least one Court in this district has recently found somewhat similar events sufficient to support a 2255 petition, see Campos v. United States, 930 F. Supp. 787, 1996 WL 327884 (E.D.N.Y. 1996), for the reasons set forth below, the Court finds that in this case the petitioner has not demonstrated any prejudice by his failure to take the stand.

 In his motion papers, Kowalczyk contends only that given the opportunity, he would have testified in order to introduce invoices from Wood Auto Body. As stated above, according to the petitioner Wood Auto Body was a repair shop that he had hired on multiple occasions at the recommendation of Diamond, his then business partner. Kowalczyk contends that Wood Auto Body's proprietor, Edward Janis had come under investigation for altering VIN's. The petitioner reasons that Diamond's recommendation of Janis' services "begs-the-question of collusion."

 However, a closer analysis reveals that even if the Court assumes that Gilroy's recommendation that Kowalczyk not testify was anything but a strategic decision not to expose his client to cross examination, an unlikely conclusion, the Court nevertheless finds that the petitioner has failed to allege any prejudice. According to Kowalczyk the purpose of his testimony would be to place the Wood Auto Body invoices into evidence. However, the petitioner does not demonstrate that if he had testified, the Court would have found those records admissible, and even if it did whether the outcome of the trial would have been different.

 At trial, the petitioner attempted to introduce the Wood Auto Records into evidence through the testimony of his wife and secretary, Linda Kowalczyk and his expert accountant witness Morris Liebman, who used the records to make his own calculations. See Tr. 845-48, 853. The Court however, sustained the Government's objection pursuant to Fed. R. Evid. 803(6) because Mrs. Kowalczyk was unable to authenticate the records. The petitioner offers no basis for the Court to conclude that he would have been successful where his wife had failed.

 In order for business records to be admissible as exceptions to the hearsay rule pursuant to Fed. R. Evid. 803(6), the documents at issue must be prepared,

 
at or near the time, by or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, . . . all as shown by the testimony of the custodian or otherwise qualified witness, unless the source of information of the method or circumstances of preparation indicate a lack of trustworthiness.

 Id. Although the Second Circuit has adopted a "generous view" of the business records exception, and the "principal precondition" of admissibility is the "trustworthiness" of the record, the proffered evidence "must meet all of the requirements of the exception" to be accepted into evidence. United States v. Strother, 49 F.3d 869, 874 (2d Cir. 1995), citing, United States v. Freidin, 849 F.2d 716, 722 (2d Cir. 1988); Saks Int'l, Inc. v. M/V Export Champion, 817 F.2d 1011, 1013 (2d Cir. 1987). The determination as to whether a business record is sufficiently reliable to warrant admission into evidence is within the sound discretion of the trial court. Strothers, 49 F.3d at 874, citing, Potamkin Cadillac Corp. v. B.R.I. Coverage Corp., 38 F.3d 627, 633 (2d Cir. 1994).

 In his moving papers, Kowalczyk makes no effort to satisfy any of the elements set forth in Rule 803(6). He does not allege any "knowledge" of Wood Auto Body's business activities or records. There are no facts to support the contention that Kowalczyk would be able to demonstrate that the records at issue were made at or near the time of the event recorded, that the records were made by a person with knowledge, that the records were kept in the regular course of business, or that Wood Auto Body regularly, made and kept such records. Further, there has been no proof that Wood Auto Body records were regularly kept as part of the petitioner's business records. Accordingly, the Court finds that because the petitioner has not satisfactorily shown that he would have been able to introduce the Wood Auto Body records had he testified at the trial, he is has not demonstrated any prejudice. As a result, Kowalczyk is unable to satisfy the second standard for a potential conflict of interest as he is unable to state a "plausible alternative defense strategy [which] . . . might have been pursued" but was not "due to the attorney's other loyalties and interests.'" Ciak, 59 F.3d at 307, quoting, Winkler, 7 F.3d at 309.

 In reaching this conclusion, the Court acknowledges two arguments made by Kowalczyk in his reply papers. First, the petitioner contends that Gilroy's denial of his right to testify affected more than his ability to have the Wood Auto Body records admitted into evidence. His failure to take the stand also "denied his entire right to testify in his own defense, whatever would have developed through the course of his testimony would be pertinent to the entire subject matter of the Indictment and Kowalczyk's right to present all evidence in support of his not guilty pleadings." However, the petitioner does not state what else he would have testified to. He does not explain what portion of the Government's case he would have controverted. Accordingly, Kowalczyk does not demonstrate how his failure to take the stand otherwise prejudiced the jury's verdict.

 Second, the petitioner asserts that the Wood Auto Body records were wrongly excluded because his secretary-wife did properly authenticate them, and even if she did not, he would have. However, because the Court's decision to exclude the documents during Mrs. Kowalczyk's testimony is irrelevant as to the petitioner's ineffective assistance of counsel claim, the Court need only consider the latter contention. According to Kowalczyk, he was a "witness to the making of the receipts at Wood Auto Body when payment was made for the repairs and could have testified to such at trial." However, even if the petitioner's allegation is taken as true, the records would still be inadmissible as Kowalczyk would be unable to testify as to Wood Auto Body's regular business practices regarding the maintenance of business records. While the Second Circuit has recognized that the records of another entity may be admitted as a company's business record where those documents are incorporated into that company's record, see United States v. Jakobetz, 955 F.2d 786, 801 (2d Cir. 1992) (addressing the regular and systematic incorporation of toll receipts into company's records), there is no indication that the records at issue are sufficiently trustworthy to permit the petitioner to authenticate them where he is unable to also testify regarding whether those documents are kept in the regular course of business.

 Moreover, Kowalczyk does not allege how the outcome of the trial was prejudiced by the fact that the alleged business records were not admitted. Indeed, in the course of the petitioner's voluminous memoranda of law, he addresses the purpose of his testimony only once, stating that the Wood Auto Body records would have

 
exculpated [him] for the VIN alteration charges and the costs of repairs would have negated the Government's tax on the profits attributed to [him] that were never gained by [him]. Similarly, Kowalczyk would have rebuked the testimony of Government witness Robert Salvatore and his claims of only making a $ 400 profit per vehicle that he sold from vehicles that had originated from Kowalczyk, which Salvatore had falsely claimed were "consignment cars" instead of the actual cars the [sic] Salvatore had "purchased from Kowalczyk."

 This statement is insufficient to demonstrate how the petitioner was prejudiced by his failure to testify. First, Kowalczyk does not explain how the exclusion of the Wood Auto Body records somehow tainted the jury's verdict with respect to his convictions for infringing 18 U.S.C. § 511. With respect to the tax fraud he states only what he would have testified to had he been given the opportunity. He does not explain how the ...


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