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McCARTHY v. U.S.

United States District Court, S.D. New York


January 23, 2004.

ROBERT McCARTHY, Petitioner, -v.- UNITED STATES OF AMERICA, Respondent

The opinion of the court was delivered by: GABRIEL GORENSTEIN, Magistrate Judge

REPORT AND RECOMMENDATION

Robert McCarthy was convicted on October 13, 1999 of 24 counts of theft of employee benefit plan funds; money laundering; creation of, and conspiracy to create, false documents required by the Employee Retirement Income Security Act of 1974 ("ERISA"); and embezzlement of bankruptcy assets. He was sentenced on September 13, 2000 to 78 months imprisonment, 3 years of supervised release, a special assessment of $1200, and restitution of $1.6 million. His conviction and sentence were affirmed on November 16, 2001 by the United States Court of Appeals for the Second Circuit. McCarthy, who is currently in prison serving his sentence, has petitioned this Court pro se under 28 U.S.C. § 2255 to vacate, set aside, or correct his sentence. For the reasons below, the petition should be denied.

I. BACKGROUND

  A. Procedural History Prior to Trial

  McCarthy was indicted on December 18, 1998. See Indictment, filed December 18, 1998 (Docket #1) ("Indictment"). The 28-count indictment charged McCarthy with the following offenses: Page 2

  (1) Theft of employee benefit plan funds in violation of 18 U.S.C. § 664 (Counts 1-7). These counts charged that McCarthy, while Chief Executive Officer and Executive Vice-President of Lloyd's Shopping Centers, Inc. ("Lloyd's"), had unlawfully directed the transfer of funds out of employee benefit plans sponsored by Lloyd's. One of these plans was a defined benefit pension plan ("Pension Plan") and the other was a defined contribution 401(k) plan ("401(k) Plan") (collectively, the "Employee Benefit Plans"). According to the indictment, monies from these plans were used by McCarthy for the purposes of persons or entities other than the Employee Benefit Plans or their employee beneficiaries. Indictment ¶¶ 1-11.

  (2) Money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i). 1956(a)(2). 1957 (Counts 8-25). These counts charged that McCarthy had conducted transactions using monies stolen from the Employee Benefit Plans knowing that these monies represented the proceeds of unlawful activity and that he conducted these transactions to conceal the nature, location, source, ownership, and control of these monies. Id. ¶¶ 12-21.

  (3) Creation of. and conspiracy to create, false documents required by ERISA in violation of 18 U.S.C. SS 371. 1027 (Counts 26-27). These counts charged that McCarthy had made, and conspired to make, false statements to Lloyd's employees in their 1995 year-end statements for their 401(k) Plan accounts. Id. ¶¶ 22-27.

  (4) Embezzlement of bankruptcy assets in violation of 18 U.S.C. § 153 (Count 28). This count charged that McCarthy had embezzled $420,000 from the bankruptcy estate of Discount Harry, Inc. ("Discount Harry"), a company unrelated to Lloyd's and for which McCarthy had acted as the disbursing agent responsible for paying the claims of Discount Harry's creditors. Id. ¶¶ 28-31. Page 3

  On June 4, 1999, McCarthy moved to dismiss various counts of the indictment. See Notice of Motion, filed June 4, 1999 (Docket #7). On July 21, 1999, McCarthy's motion was denied in its entirety by Judge Barrington D. Parker, Jr., who was at that time a United States District Judge. See Transcript of Hearing, dated July 21, 1999 (Docket #60), at 24-35.

  B. Evidence at Trial

  Judge Parker presided over McCarthy's jury trial, which began on September 23, 1999 and ended on October 13, 1999.

  1. The Prosecution's Case-in-Chief

  Lloyd's was a publicly held corporation that had operated two combination supermarket and department stores in Orange County, New York since the 1950's. (Kelder: Tr. 223). It filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York on December 1, 1992. (Kelder: Tr. 225). Prior to this filing, Lloyd's had retained the services of Robert J. McCarthy & Co. ("McCarthy & Co."), a consulting company owned by McCarthy. (Kelder: Tr. 225). McCarthy & Co. was hired to consult Lloyd's in its attempt to emerge from bankruptcy. (Kelder: Tr. 225). McCarthy, a certified public accountant, began working at Lloyd's himself at the end of October 1994. (Kelder: Tr. 225). At the time McCarthy was hired, Lloyd's sponsored the Employee Benefit Plans. (McGloine: Tr. 55; Kelder: Tr. 227-28).

  On December 6, 1994, McCarthy reached an agreement with Edmund Lloyd ("Mr. Lloyd"), the owner of Lloyd's, to act as its Chief Executive Officer and Executive Vice-President for an annual salary of $160,000. (O'Reilly: Tr. 525, 528-29, 534). The agreement also granted McCarthy the right to purchase three 18-month options entitling him to buy, in total, 1.5 million Page 4 shares of Lloyd's. (O'Reilly: Tr. 531, 534). If exercised, McCarthy would have been Lloyd's majority shareholder. (O'Reilly: Tr. 531-32). In addition, the agreement provided that McCarthy would receive as part of his compensation ten percent of Lloyd's pre-tax profit per year provided that certain base-level profits were met each year. (O'Reilly: Tr. 535). Thus, if Lloyd's prospered, so would McCarthy.

  At trial, the prosecution presented evidence that, while Chief Executive Officer and Executive Vice-President of Lloyd's, McCarthy (1) stole more than $2 million from the Employee Benefit Plans in order to pay off various corporate debts — namely, a tax lien held by Orange County, a mortgage on Lloyd's properties held by Fleet Bank, and a letter of credit in favor of one of Lloyd's gas suppliers; (2) embezzled bankruptcy funds from Discount Harry in order to satisfy the Orange County tax lien; (3) laundered the monies stolen from the Employee Benefit Plans in transactions intended to disguise their source; and (4) conspired to create, and did create, false ERISA documents by distributing to employees falsified year-end statements for their 401(k) Plan accounts. The prosecution's evidence on each of these schemes will be considered in turn.

  a. Theft of Employee Benefit Plan Funds

  i. Tax Lien Held by Orange County

  In order for Lloyd's to emerge from bankruptcy and avert both a shutdown and liquidation, its reorganization plan needed to be approved by the bankruptcy court. (Kelder: Tr. 350-52; O'Reilly: Tr. 541-42). The bankruptcy court would not approve the reorganization plan, however, unless Lloyd's paid several outstanding debts, the most significant of which was an outstanding $400,000 tax lien held by Orange County. (O'Reilly: Tr. 541-42). Page 5

  McCarthy thus began searching for a source of funds that could be used to pay off the Orange County tax lien in time for the bankruptcy hearing, which was scheduled for December 28, 1994. (Kelder: Tr. 231-39; O'Reilly: Tr. 541-42). In mid-to late-December 1994, McCarthy asked the treasurer of Lloyd's, William R. Kelder, whether Lloyd's employees could take loans from the 401(k) Plan and then use the proceeds to purchase stock in Lloyd's so that the company would have funds to pay the tax lien. (McGloine: Tr. 57-59; Kelder: Tr. 231-32). On December 21, 1994, Kelder contacted the administrator of the 401(k) Plan, State Mutual Life Insurance Company ("State Mutual"), and spoke with the account manager assigned to the 401(k) Plan, Edward McGloine. (McGloine: Tr. 53-54, 57-58; Kelder: Tr. 227-28, 233-35). Kelder had McGloine speak directly with McCarthy. (McGloine: Tr. 58; Kelder: Tr. 235).

  According to McGloine, McCarthy was primarily interested in whether, if a loan program were instituted, the employee participants would be restricted in what they could do with the loan proceeds. (McGloine: Tr. 58). Specifically, McCarthy asked whether the participants could use the loan proceeds to buy stock in Lloyd's "to basically protect their job and invest in the company and try to keep Lloyd's going." (McGloine: Tr. 59). McGloine informed McCarthy that the 401(k) Plan could be amended to permit Lloyd's employees to take a loan from the 401(k) Plan and that they could then use the proceeds however they wished. (McGloine: Tr. 59; Kelder: Tr. 235). McGloine also told McCarthy that any loans would have to be repaid by the employees through payroll deductions. (McGloine: Tr. 59). McCarthy was apparently dissatisfied with this proposal because it required amending the 401(k) Plan, which would take time, and the December 28 bankruptcy hearing was imminent. (Kelder: Tr. 235). Page 6

  Having rejected this option, McCarthy then asked McGloine whether Lloyd's could withdraw monies from the Pension Plan — specifically, $500,000 — and then use these monies to pay off the Orange County tax lien. (McGloine: Tr. 60). McGloine responded that such a transaction would be permissible under the Pension Plan only if Lloyd's could prove that the monies were being transferred to a trust that would be maintained on behalf of the employee participants. (McGloine: Tr. 60). McGloine also told McCarthy that, given that the proposed transaction involved an investment in a bankrupt company — Lloyd's — the transaction would probably be prohibited. (McGloine: Tr. 60-61, 75). McGloine informed McCarthy that, in any event, the proposed transaction would take some time to complete. (McGloine: Tr. 61-62). McCarthy responded that if he could not withdraw the $500,000 immediately, he would seek to cancel both the Pension Plan and the 401(k) Plan with State Mutual. (McGloine: Tr. 62).

  McGloine brought the matter to the attention of his supervisor, Alexander T. Dike, who was Assistant Vice President and General Counsel for State Mutual. (Dike: Tr. 96-98). In turn, Dike spoke with Richard G. Hickey, who was outside counsel for Lloyd's. (Dike: Tr. 98; Hickey: Tr. 1144). Dike informed Hickey that McCarthy's proposal to use $500,000 from the Pension Plan to pay the Orange County tax lien — a corporate tax obligation — would be both imprudent, because Lloyd's was in bankruptcy, and prohibited by ERISA, because it would not be done for the benefit of the employee participants. (Dike: Tr. 98-99). Dike subsequently spoke with McCarthy, relayed the substance of his conversation with Hickey, confirmed that the $500,000 would be used to pay off the tax lien, and told him that in order for the transaction to proceed Lloyd's would need to establish a trust on behalf of its employees and to provide a certification that it had considered and complied with ERISA. (Dike: Tr. 99-100). McCarthy Page 7 replied that State Mutual did not have the authority to withhold the distribution and that it was none of State Mutual's business what Lloyd's did with the $500,000. (Dike: Tr. 100-01).

  McCarthy then contacted Terrence P. O'Reilly, who was a partner at Mickey's law firm, and conveyed the substance of his conversation with Dike. (O'Reilly: Tr. 524, 535-37). O'Reilly researched the proposed transaction's legality and concluded that the transaction would be prohibited by ERISA because it would be done primarily for the benefit of Lloyd's and not for the employee participants. (O'Reilly: Tr. 538). However, O'Reilly also concluded that State Mutual had no authority to withhold the distribution, regardless of the transaction's legality. (O'Reilly: Tr. 538). O'Reilly also researched the penalties that could be levied for engaging in a transaction prohibited by ERISA. (O'Reilly: Tr. 544-46). He concluded that the penalties ranged from civil fines of up to 100% of the value of the transaction to criminal fines and/or imprisonment. (O'Reilly: Tr. 546). O'Reilly relayed these conclusions to McCarthy. (O'Reilly: Tr. 538-39, 546). McCarthy dismissed O'Reilly's concerns and told him to prepare a letter to State Mutual demanding that the $500,000 be released from the Pension Plan. (O'Reilly: Tr. 536-37, 539, 546).

  On December 23, 1994, McCarthy faxed Dike a letter, which had been prepared by O'Reilly, formally requesting that State Mutual release $500,000 from the Pension Plan. (Dike: Tr. 101-02; O'Reilly: Tr. 536-37). On December 27, McCarthy faxed Dike another letter indicating that, because State Mutual had ignored his December 23 letter, he was demanding the liquidation of the entire Pension Plan, in addition to the $500,000 which he had previously requested. (Dike: Tr. 104-06). McCarthy also indicated in this letter that an employee trust had been established with the Bank of New York ("BNY") and that all of the Pension Plan monies Page 8 should be transferred to it. (Dike: Tr. 105; Kelder: Tr. 237). This trust (the "Pension Plan Trust") had been opened earlier in the day by McCarthy and Kelder, with Kelder named as trustee. (Amodio: Tr. 158-59, 162, 165; Kelder: Tr. 237-38, 258-60).

  On December 28, Dike had not yet received McCarthy's December 27 letter. (Dike: Tr. 104-05). But he did fax McCarthy a letter responding to McCarthy's December 23 letter. (Dike: Tr. 102). In his response, Dike specified why State Mutual would not distribute the $500,000 from the Pension Plan as McCarthy had requested. (Dike: Tr. 102-03). First, Dike indicated that the Pension Plan, as written, did not provide for a single, lump-sum distribution and would need to be amended. (Dike: Tr. 103). Second, Dike indicated that State Mutual would need to receive from Lloyd's counsel a certification that the transaction would be in compliance with ERISA. (Dike: Tr. 103-04). Dike did not receive any response from McCarthy until the following day, after the bankruptcy hearing had already taken place. (Dike: Tr. 106).

  At the hearing on December 28, the bankruptcy court confirmed the reorganization plan without McCarthy's using any of the State Mutual funds because, as described further in section I.B.1.b below, McCarthy paid the $400,000 Orange County tax lien using bankruptcy funds that he had embezzled from Discount Harry. Nonetheless, McCarthy continued to pursue the removal of the funds in the Employee Benefit Plans from State Mutual. On December 29, he faxed Dike a letter reiterating his request to have all of the Pension Plan monies transferred to the Pension Plan Trust at BNY. (Dike: Tr. 106-07). The letter also stated that McCarthy had instructed Lloyd's attorneys to file a lawsuit against State Mutual on January 4, 1995 if the funds were not so transferred. (Dike: Tr. 107). On December 30, Dike received two letters, one from O'Reilly and the other from Kelder, both of which relayed McCarthy's instructions that the Page 9 401(k) Plan also be liquidated. (Dike: Tr. 108-10). After receiving these two letters, Dike hired David Duff and Ellen Quackenbos, attorneys at Debevoise & Plimpton LLP, to represent State Mutual. (Dike: Tr. 110-11).

  On January 5, 1995, Dike sent a letter to Kelder responding to Kelder's December 30 letter. (Dike: Tr. 111-12). He indicated that the 401(k) Plan would not be liquidated because Lloyd's counsel had not yet certified that the transaction would be in compliance with ERISA and the Internal Revenue Code. (Dike: Tr. 112). Thereafter, between January 5 and January 12, McCarthy, Kelder, O'Reilly, Dike, Duff, and Quackenbos engaged in negotiations to structure the transfer of the monies in the Employee Benefit Plans and to arrive at a mutually agreeable certification. (Dike: Tr. 112-19). On January 13, with no agreement having been reached, McCarthy faxed Dike a letter, which had been prepared by O'Reilly, stating that he intended to file a complaint against State Mutual with the Department of Labor. (Dike: Tr. 120-22; O'Reilly: Tr. 551-53). Attached to this letter was a letter on Lloyd's letterhead from McCarthy to the regional director of the New York State Department of Labor. (Dike: Tr. 120, 125-26). Although McCarthy indicated that "[t]he attached letter [was] going to be mailed today," it was never sent and was later found in McCarthy's desk still sealed after he was fired in February 1996. (Dike: Tr. 122, 126; O'Reilly: Tr. 577).

  Dike responded to McCarthy's letter on January 16, again stating that State Mutual would release the funds in the Employee Benefit Plans only upon receiving an appropriate certification. (Dike: Tr. 122-23). On January 17, McCarthy and Kelder caused another trust at BNY to be opened (the "401(k) Plan Trust") (collectively with the Pension Plan Trust, the "Employee Benefit Plan Trusts"), again with Kelder named as trustee. (Amodio: Tr. 158-59, 163-65; Page 10 Kelder: Tr. 258-59). On January 18, McCarthy faxed Dike a letter signed by both McCarthy and Kelder certifying that the Employee Benefit Plan Trusts had been created and that the monies from the Employee Benefit Plans would be managed and invested in compliance with ERISA. (Dike: Tr. 124-25). On January 20 or January 21, State Mutual liquidated the Pension Plan and the 401(k) Plan and sent checks for the balance of each account to Lloyd's; one of the checks was payable to the Pension Plan Trust and the other to the 401(k) Plan Trust. (McGloine: Tr. 67; Dike: Tr. 127; Kelder: Tr. 260; O'Reilly: Tr. 555-56). Kelder then deposited these checks into the respective Employee Benefit Plan Trusts at BNY. (Kelder: Tr. 260; O'Reilly: Tr. 555-56).

  Less than a week later, McCarthy began transferring these monies to accounts under his control. On January 26, McCarthy signed a wire transfer request directing that $300,000 be wired from the Pension Plan Trust to an account at National Westminster Bank (the "Alliance Account") held by a company named Alliance Capital Design Group, Ltd. ("Alliance"). (Kelder: Tr. 261-63; Fries: Tr. 437, 441-42). Alliance was a corporation partially owned by McCarthy that had been created as a holding company to sell franchise rights and to receive franchise payments for Gibraltar Transmission, a muffler repair business also partially owned by McCarthy. (Salas: Tr. 411-12; Fries: Tr. 435-36). Alliance was not a financial services firm and was not in the business of administering employee benefit plans. (Salas: Tr. 412). McCarthy had Kelder deliver the wire transfer request to BNY. (Kelder: Tr. 261-62). The $300,000 was transferred to the Alliance Account on January 26. (Fries: Tr. 441-42). Kelder testified that he believed erroneously at the time that Alliance was a large Wall Street investment firm. (Kelder: Tr. 262-63). Page 11

  In February or March of 1995, Edward Fries, who maintained Alliance's books, noticed the $300,000 transfer and asked McCarthy about it. (Fries: Tr. 437, 441-42). McCarthy told Fries that the money belonged to Lloyd's, that he should ignore it, that he should not use it for Alliance expenses, and that it was going to be returned to Lloyd's after a short while. (Fries: Tr. 442).

  ii. Mortgage Held by Fleet Bank

  As part of the bankruptcy reorganization, McCarthy had been meeting with representatives of Fleet Bank ("Fleet"), which held a mortgage secured by the Lloyd's properties in Orange County (the "Fleet Mortgage"). (Kelder: Tr. 263-64; Kehoe: Tr. 455-57). Prior to the bankruptcy hearing in December 1994, Fleet agreed to extend the payment date of the Fleet Mortgage by two months, from April 1, 1995 to June 1, 1995, but insisted that Lloyd's lease a portion of the properties or try to sell them by June 1, 1995. (Kelder: Tr. 264; Kehoe: Tr. 455-58). If Lloyd's failed to meet these conditions, escalating penalty clauses, beginning at $15,000 per month, would have taken effect and would have further reduced Lloyd's chances of emerging from bankruptcy. (Kelder: Tr. 264; Kehoe: Tr. 457-58; McGowan: Tr. 474).

  Beginning in January 1995, McCarthy began exploring whether monies from the Employee Benefit Plans could be used to pay down the Fleet Mortgage. (Kelder: Tr. 264-65; Kehoe: Tr. 458-59). McCarthy discussed several proposals with O'Reilly. The first would have had the Employee Benefit Plans directly loan funds to Lloyd's so that Lloyd's could purchase the properties secured by the Fleet Mortgage, with the Employee Benefit Plans taking a mortgage on the properties. (O'Reilly: Tr. 556-57). O'Reilly informed McCarthy that this transaction would be prohibited by ERISA because it would be done for the benefit of Lloyd's and not the Page 12 employee participants and because ERISA's diversification rules prohibited investing the bulk of the Employee Benefit Plans' assets in a single investment. (O'Reilly: Tr. 557). McCarthy then proposed having the Employee Benefit Plans purchase the property outright. (O'Reilly: Tr. 557). O'Reilly informed McCarthy that this transaction also would be prohibited by ERISA's diversification rules. (O'Reilly: Tr. 557-58).

  In May 1995, McCarthy asked O'Reilly whether the monies in the Employee Benefit Plan Trusts could be transferred to "an independent investment company" — referring to Alliance — which would then loan the money to Lloyd's, take a mortgage to secure the loan, and return mortgage-backed securities to the Employee Benefit Plan Trusts. (O'Reilly: Tr. 558). O'Reilly told McCarthy that using a straw company to do indirectly what could not be done directly would not validate the transaction and that it would still be prohibited by ERISA. (O'Reilly: Tr. 558-59). McCarthy replied that he was "getting tired of hearing `no' from my lawyers." (O'Reilly: Tr. 559).

  Notwithstanding O'Reilly's advice, McCarthy went ahead and used monies from the Employee Benefit Plan Trusts to pay down the Fleet Mortgage. (O'Reilly: Tr. 560). McCarthy had Kelder go to BNY and initiate wire transfers to Alliance for $1,115,000 (from the Pension Plan Trust) and $635,000 (from the 401(k) Plan Trust). (Kelder: Tr. 265-66). Kelder understood that McCarthy intended to use these monies through Alliance to pay down the Fleet Mortgage. (Kelder: Tr. 266-67). In return, Fleet would extinguish the mortgage on one of the two Orange County properties, leaving the other as security for the remaining loan balance. (McGowan: Tr. 475, 485). Because the wire transfer documents were signed only by McCarthy and not by Kelder (the trustee), however, BNY would not accept them. (Kelder: Tr. 267). McCarthy thus Page 13 instructed Kelder to draw, sign, and have certified checks for the same amount from the two Employee Benefit Plan Trusts. (Kelder: Tr. 268-71).

  On June 14, Kelder signed two checks, one from each of the Employee Benefit Plan Trusts, and brought them to BNY to be certified. (Amodio: Tr. 184-85; Kelder: Tr. 270-71). Because these were trust accounts, BNY asked for additional documentation concerning how Alliance intended to use these trust funds. (Kelder: Tr. 271). Kelder conveyed this to McCarthy and was told by McCarthy that "he would take care of it." (Kelder: Tr. 271). Later that day, Kelder received a fax copy of an unsigned letter written on Alliance letterhead from Herbert N. Salas to Kelder, as trustee. (Amodio: Tr. 185-86; Kelder: Tr. 273). Salas was one of McCarthy & Co.'s accountants. (Kelder: Tr. 273; Salas: Tr. 407-09). The letter stated that Alliance had obtained a mortgage-backed investment for the Employee Benefit Plan Trusts that would earn interest of eight percent. (Amodio: Tr. 186). This statement was false, however, because Alliance had never obtained such a mortgage. (Pan: Tr. 519-20). After Kelder received the letter, McCarthy had him obtain Salas's signature and then fax the letter to BNY. (Amodio: Tr. 185-86; Kelder: Tr. 273-74; Salas: Tr. 410-12). The checks were then certified and given to McCarthy by Kelder. (Kelder: Tr. 274). The next day, June 15, McCarthy went to the Middletown branch of Fleet, opened a corporate account in the name of "Lions Capital Design Group Limited" (the "Lions Account"), and deposited the certified checks (totaling $1,750,000) into this account. (Vance: Tr. 429-34). McCarthy apparently intended to open the account in Alliance's name but, because of a clerical error made by Fleet, it was opened with the Lions name instead. (Vance: Tr. 432). Page 14

  On June 22, a closing was held on the Fleet Mortgage. (McGowan: Tr. 476). Among those in attendance were McCarthy, Hickey, and Mr. Lloyd. (McGowan: Tr. 477). Fleet extinguished the mortgage on one of the two Orange County properties, leaving the other as security for the remaining balance. (McGowan: Tr. 475, 485). For payment, McCarthy wired $1,750,000 from the Lions Account to a Fleet corporate account. (McGowan: Tr. 478-79, 481-83). However, Lloyd's needed an additional $50,000 to fully meet its obligations under the Fleet Mortgage. (McGowan: Tr. 483). Accordingly, McCarthy arranged a $50,000 wire transfer from the Alliance Account. (McGowan: Tr. 477, 482-83). By satisfying this portion of the Fleet Mortgage, Lloyd's avoided the imposition of the penalties that had been provided for when Lloyd's and Fleet agreed to amend the Fleet Mortgage prior to the bankruptcy hearing. (McGowan: Tr. 485).

  iii. Letter of Credit

  After transferring the monies from the Employee Benefit Plans into the Alliance Account and the Lions Account, McCarthy began using those funds to bolster Lloyd's precarious financial position. In March 1995, McCarthy used monies from the Alliance Account to guarantee a Lloyd's corporate obligation — namely, a $50,000 letter of credit owed to Warex Terminal Corporation ("Warex"), the gas supplier for Lloyd's service stations. (Amodio: Tr. 179, 183). McCarthy wired $50,000 from the Alliance Account to his own personal account at BNY. (Fallik: Tr. 724-25).*fn1 On March 15, 1995, he used these funds to purchase a one-year, $50,000 certificate of deposit with BNY. (Amodio: Tr. 180-83). McCarthy used this certificate of Page 15 deposit to guarantee (and later satisfy) the $50,000 letter of credit Lloyd's owed to Warex. (Amodio Tr. 179, 183-84).

  b. Embezzlement of Bankruptcy Assets

  While McCarthy was attempting to secure monies from the Employee Benefit Plans to pay the Orange County tax lien in time for the December 28 bankruptcy hearing, he was also attempting to obtain funding from a different source. Prior to his involvement with Lloyd's, McCarthy had been appointed as accountant and disbursing agent for the Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy proceeding of Discount Harry, a New Jersey corporation specializing in the sale of goods at discount prices. (Deiches: Tr. 487, 491-93). In that role, McCarthy was responsible for receiving monies in trust from the bankruptcy estate of Discount Harry and for paying creditors under the terms of Discount Harry's court-approved bankruptcy plan. (Deiches: Tr. 492-94).

  On December 13, 1994, in connection with his role as disbursing agent, McCarthy received two checks from Discount Harry's bankruptcy estate totaling $420,000. (Deiches: Tr. 502). McCarthy deposited them into an account at National Westminster Bank (the "Discount Harry Account") that had been set up for the purpose of disbursing monies to Discount Harry's creditors. (Deiches: Tr. 502-03; Fallik: Tr. 718). On December 22, McCarthy opened a personal checking account in his own name at BNY. (Amodio: Tr. 174). That same day, McCarthy directed a wire transfer of $420,000 from the Discount Harry Account to his just-opened personal account. (Fallik: Tr. 718-19). McCarthy then directed Kelder to include the balance in his personal account as an asset available to Lloyd's in connection with the upcoming bankruptcy hearing. (Kelder: Tr. 252-53). Page 16

  At the bankruptcy hearing on December 28, McCarthy agreed to take personal responsibility for satisfying the Orange County tax lien. (Kelder: Tr. 253). The hearing was adjourned for lunch, at which time McCarthy went to BNY and obtained a certified check on his personal account payable to Orange County. (Kelder: Tr. 254-55; O'Reilly: Tr. 542). McCarthy returned to the bankruptcy court and delivered the certified check as payment in satisfaction of the $400,000 Orange County tax lien. (Kelder: Tr. 253, 255; O'Reilly: Tr. 542-43). The debt was paid, the bankruptcy court confirmed Lloyd's reorganization plan, and Lloyd's emerged from bankruptcy. (Kelder: Tr. 255; O'Reilly: Tr. 543).

  McCarthy eventually replenished the funds he had taken from the Discount Harry Account through loans from friends and acquaintances, as well as from funds taken from Lloyd's operating account. (Accardi: Tr. 674-76; Posillico: Tr. 680-82; Razack: Tr. 684-87).

  c. Money Laundering

  After transferring the monies from the Employee Benefit Plans into the Alliance Account and the Lions Account, McCarthy also began using those funds to assist him in a separate business venture entirely unrelated to Lloyd's. In the Spring of 1995, McCarthy and others formed Med-Ox Technologies, Limited ("Med-Ox"), a company that provided hyperbaric therapy to patients in hospital burn units. (Butler: Tr. 419-22). Hyperbaric therapy is a type of medical treatment in which a patient is placed into a pressurized chamber that provides pure oxygen. (Reimers: Tr. 210-11).

  On July 2, 1995, Med-Ox entered into a contract with Westchester County Medical Center ("Westchester Medical") to provide it with hyperbaric equipment and personnel for treating its patients. (Butler: Tr. 423-24). McCarthy purchased two hyperbaric chambers needed Page 17 for this contract from Reimers Systems, Incorporated ("Reimers Systems"). (Reimers: Tr. 210-14). McCarthy paid for this equipment in installments, totaling $56,000, through wire transfers from the Alliance Account. (Reimers: Tr. 213-16, 219; Fallik: Tr. 708, 710-11).

  Ultimately, the contract with Westchester Medical was terminated before any hyperbaric treatment could be attempted. (Reimers: Tr. 216; Butler: Tr. 425-27). Med-Ox still retained the hyperbaric chambers, however, and McCarthy, with the assistance of Reimers Systems, leased one of the chambers to a third party. (Reimers: Tr. 216-18). In so doing, McCarthy personally received lease payments totaling $60,000. (Reimers: Tr. 218).

  d. Creation of, and Conspiracy to Create, False ERISA Statements

  In the Spring of 1995, after McCarthy had already liquidated the Employee Benefit Plans, Lloyd's employees began to inquire why they had not yet received quarterly statements for their 401(k) Plan accounts. (Kelder: Tr. 274-75). In response, McCarthy instructed Kelder to distribute to them copies of their 401(k) Plan account statements indicating contributions through November 1994. (Kelder: Tr. 275-76, 280; Owen: Tr. 749-51). This was the last account statement showing that any assets were still in the 401(k) Plan. (Kelder: Tr. 395-96). Additionally, McCarthy had Kelder circulate a memorandum, which McCarthy had prepared, stating that the 401(k) Plan would earn interest at five percent per year and that, effective March 1, 1995, Lloyd's would begin matching a quarter of the employees' weekly contributions. (Kelder: Tr. 276; Owen: Tr. 749-50).

  Notwithstanding their receipt of these documents, employees continued to inquire about the status of their 401(k) Plan accounts. (Kelder: Tr. 277). Near the end of 1995, McCarthy told Kelder to create a spreadsheet listing each 401(k) Plan participant and the balance in each Page 18 account at the time the funds were withdrawn from State Mutual. (Kelder: Tr. 277-78, 280). After Kelder gave the spreadsheet to McCarthy, McCarthy added to it false information purporting to show employee and company contributions, and interest accrued thereon, since the date the 401(k) Plan had been liquidated. (Kelder: Tr. 281-85). McCarthy then returned the spreadsheet to Kelder and told him that when participating employees asked for information concerning their accounts, Kelder should generate individual statements showing account balances using the figures from the revised spreadsheet. (Kelder: Tr. 285-86). Although no assets remained in the 401(k) Plan, McCarthy instructed Kelder to tell employees that these statements accurately reflected how their monies were being invested. (Kelder: Tr. 395-96). When one Lloyd's employee went to McCarthy's office to inquire about the status of her 401(k) Plan account, McCarthy showed her what purported to be a statement of her account, reflecting a balance of nearly $20,000, though in fact her account no longer existed. (Owen: Tr. 750-52).

  2. McCarthy's Case-in-Chief

  McCarthy was the only witness called by the defense. McCarthy testified that when he first became Lloyd's Chief Executive Officer, a company named J&B was under contract to purchase one of Lloyd's Orange County properties and that the proceeds from that sale were intended to be used to confirm Lloyd's reorganization plan with the bankruptcy court. (McCarthy: Tr. 807, 811). However, J&B withdrew from the contract on December 19, 1994, prior to the bankruptcy hearing. (McCarthy: Tr. 810-11). Thereafter, McCarthy began negotiating with Lloyd's creditors to defer their claims so that Lloyd's reorganization plan could be confirmed. (McCarthy: Tr. 812-13). The tax lien held by Orange County, however, could not be deferred. (McCarthy: Tr. 813-15). Page 19

  McCarthy discussed the situation with Hickey, O'Reilly, Mr. Lloyd, and Kelder and determined that if monies from the Employee Benefit Plans could be used to purchase the tax lien, then the bankruptcy reorganization could proceed. (McCarthy: Tr. 815-17). McCarthy testified that he believed this was lawful because the Employee Benefit Plans would be receiving in return an investment secured by the Orange County properties. (McCarthy: Tr. 817, 976). Accordingly, McCarthy had O'Reilly begin the process of having State Mutual release $500,000 from the Pension Plan. (McCarthy: Tr. 817).

  McCarthy testified that several of the letters sent to State Mutual bearing his signature were drafted originally by O'Reilly. (McCarthy: Tr. 818-24). McCarthy acknowledged sending the January 13, 1995 letter to Dike in which he complained about State Mutual's refusal to release the funds without a certification and in which he indicated that a complaint against State Mutual would be filed with the Department of Labor. (McCarthy: Tr. 831-34). McCarthy also claimed to have discovered that the Employee Benefit Plans had an undeclared surplus of approximately $500,000 to $750,000 that had not been identified by State Mutual. (McCarthy: Tr. 839-41). McCarthy testified that this surplus existed even though Lloyd's accountants — who prepared the financial statements for the Employee Benefit Plans — had never identified any such surplus. (McCarthy: Tr. 838-39). McCarthy testified that he thought Lloyd's could force State Mutual to turn over this surplus and that Hickey, O'Reilly, and Kelder agreed initially with this assessment. (McCarthy: Tr. 841-42).

  McCarthy also testified that in mid-January 1995 a cash flow emergency arose at Lloyd's because Kelder had used nearly all of Lloyd's available cash to pay a real estate tax bill of over $200,000 that was not yet due. (McCarthy: Tr. 847). McCarthy stated that, after learning of this Page 20 emergency, he directed Kelder to wire $300,000, which he believed was surplus, from the Pension Plan Trust to the Alliance Account. (McCarthy: Tr. 846-48). McCarthy testified that he directed the monies be wired to Alliance (as opposed to Lloyd's) so that Kelder could not again misspend funds. (McCarthy: Tr. 848). In addition, McCarthy claimed that he told Hickey about the $300,000 wire transfer and that Hickey knew of McCarthy's control over Alliance. (McCarthy: Tr. 84849, 852).

  Concerning the pay down of the Fleet Mortgage using monies from the Employee Benefit Plans, McCarthy testified that, based on discussions with Hickey, O'Reilly, Kelder, and Mr. Lloyd, he had believed that the transaction was legal under an emergency exception to ERISA. (McCarthy: Tr. 879). According to McCarthy, he elected to use Alliance as a middleman to ensure that sufficient reserves remained in the Employee Benefit Plans to pay any employee withdrawal demands. (McCarthy: Tr. 879-80). McCarthy also claimed that he was told by Hickey or O'Reilly that using Alliance in this transaction was permissible since the Employee Benefit Plans would be receiving a secured investment in return. (McCarthy: Tr. 880-81).

  McCarthy acknowledged his role in the Discount Harry transaction and did not deny using the bankruptcy estate's funds to pay off the tax lien, but he claimed that he believed it to be permissible because Discount Harry was receiving a secured investment in return. (McCarthy: Tr. 901-03). McCarthy did admit, however, that he had no paperwork concerning the existence of this alleged secured investment. (McCarthy: Tr. 937).

  McCarthy also acknowledged his role in the Med-Ox transaction with Westchester Medical and that he purchased the hyperbaric chambers for Med-Ox using the funds in the Alliance Account, but he claimed that Hickey advised him on the transaction, knew all of its Page 21 details, and performed the legal work for Med-Ox in attempting to finalize it. (McCarthy: Tr. 859-66).

  3. The Prosecution's Rebuttal

  In rebuttal, Hickey testified that, contrary to McCarthy's testimony, he had told McCarthy that using $500,000 from the Pension Plan to pay off the Orange County tax lien or to purchase Lloyd's property directly would be prohibited transactions under ERISA because they would be done for the benefit of Lloyd's and not the employee participants. (Hickey: Tr. 1150-52, 1156). Hickey denied discussing any alleged surplus in the Employee Benefit Plans with McCarthy. (Hickey: Tr. 1167). Hickey also testified that he never told McCarthy that paying down the Fleet Mortgage using monies from the Employee Benefit Plans would be permissible or that it would meet any alleged emergency exception to ERISA. (Hickey: Tr. 1169).

  Concerning the pay-down of the Fleet Mortgage using Alliance as a middleman, Hickey testified that in May 1995 McCarthy described to him his plan to invest the assets from the Employee Benefit Plans in an "investment house" named Alliance Capital Design Group, Ltd., which would give back a mortgage to secure the investment. (Hickey: Tr. 1158-59). Hickey stated that he expected to represent Lloyd's with respect to both the Alliance and the Fleet aspects of the transactions but that on June 16, 1995, McCarthy instructed him to work only on the Fleet portion. (Hickey: Tr. 1159-61).

  C. The Jury Verdict and Sentencing

  On October 13, 1999, a jury found McCarthy guilty on three counts of theft of employee benefit plan funds in violation of 18 U.S.C. § 664 (Counts 1-3), eighteen counts of money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i), 1956(a)(2), 1957 (Counts 8-25), two Page 22 counts of creating, and conspiring to create, false ERISA documents in violation of 18 U.S.C. § 371, 1027 (Counts 26-27), and one count of embezzlement of bankruptcy assets in violation of 18 U.S.C. § 153 (Count 28). (Tr. 1477-80). The jury found McCarthy not guilty on four counts of theft of employee benefit plan funds in violation of 18 U.S.C. § 664 (Counts 4-7). (Tr. 1477). These counts specifically related to four withdrawals made by McCarthy in November and December 1995 from the Employee Benefit Plan Trusts totaling $50,000. See Indictment ¶ 11.

  On September 13, 2000, McCarthy was sentenced to 78 months imprisonment, 3 years of supervised release, a special assessment of $1200, and restitution of $1.6 million. (Sentencing Tr. 37-38).

  D. McCarthy's Appeal

  McCarthy timely filed his notice of appeal on September 15, 2000. See Notice of Appeal, filed September 15, 2000 (Docket #52). McCarthy proffered the following grounds in support of reversing his conviction and/or sentence: (1) The evidence presented at trial was legally insufficient to support his money laundering convictions. See Brief for Defendant-Appellant, dated January 26, 2001 ("Def. App. Brief), at 21-29. (2) Judge Parker failed to instruct the jury properly on McCarthy's good-faith defense. See id. at 29-39. According to McCarthy, Judge Parker erred by telling the jury that the prosecution had to prove that McCarthy did not believe in good faith that his use of the Employee Benefit Plan funds was authorized "by law." See id. at 34. McCarthy argued that he should have instructed the jury that the prosecution had to prove that McCarthy did not believe in good faith that his use of the Employee Benefit Plan funds was authorized "by the Plan's representatives," such as Kelder, who was the trustee of the Employee Page 23 Benefit Plans. See id. at 33. (3) The prosecution knowingly permitted and elicited the perjured testimony of O'Reilly and Hickey. See id. at 39-44. (4) Judge Parker erred in applying the sentencing guidelines to McCarthy, resulting in an increased sentence from 33 to 78 months. See id. at 44-61.

  On November 16, 2001, the Second Circuit affirmed both McCarthy's conviction and his sentence. See United States v. McCarthy, 271 F.3d 387 (2d Cir. 2001). The court ruled with respect to each of the four grounds for reversal as follows: (1) On the sufficiency of the evidence claim, the court held that there was "sufficient evidence for a rational trier of fact to have `found the essential elements of the crime [of money laundering] beyond a reasonable doubt.'" Id. at 395-96 (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). (2) The court rejected the jury instruction claim on the ground that "McCarthy did not raise a valid good faith defense by arguing he believed in good faith that Kelder had authorized use of the funds. Rather, McCarthy had to believe, in good faith, that the use of the funds was authorized by law." Id. at 398. (3) The court "dispense[d] quickly" with McCarthy's claim as to perjured testimony on procedural grounds because there was "no evidence in the record suggesting McCarthy made a motion [for a new trial] within seven days after the verdict and there is no hint of newly discovered evidence." Id. at 399; see also Fed.R.Crim.P. 33 (unless new evidence is presented, motion for a new trial must be made within seven days of the verdict). The court also stated that it would have rejected McCarthy's third claim even if it had considered it on the merits since McCarthy's trial counsel "addressed the conflicting testimony on cross examination" and "nothing in the record indicates the alleged perjury remained undisclosed during trial." McCarthy, 271 F.3d at 399-400. (4) Page 24 Finally, the court concluded that Judge Parker applied the sentencing guidelines correctly. Id. at 400-02.

  E. McCarthy's Legal Representation

  Prior to his indictment, McCarthy was represented at various times by Orin Snyder, Robert Chan, Susan Egan, and Charles Ross. See Declaration in Opposition to Petition for Habeas Corpus, filed February 28, 2003 (Docket #70) ("Resp. Dec!."), ¶¶ 4-6. Ross represented McCarthy at his arraignment. See Petition Under 28 U.S.C. § 2255 to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody, filed November 14, 2002 ("Petition"), ¶ 15(b). Afterward, McCarthy proceeded pro se for a brief period, with Paul Davison appointed by Judge Parker as standby counsel. See Resp. Decl. ¶ 6. At trial, McCarthy was represented by Richard B. Lind. See Petition ¶ 15(c). At sentencing and through the Second Circuit's decision, McCarthy was represented by Jason Brown of the law firm of Holland & Knight LLP. See id. ¶ 15(d)-(e).

  F. The Instant Petition

  McCarthy timely filed the instant petition with this Court on November 14, 2002. In his petition, McCarthy asserts seven grounds for relief, which can be broken down into two general categories. Grounds One, Two, Three, and Seven contend that McCarthy was denied effective assistance of counsel at trial. See Statement of Grounds ("Grounds") (annexed to Petition), at 1-4, 8. Grounds Four, Five, and Six assert that the prosecution violated Brady v. Maryland, 373 U.S. 83 (1963), by failing to disclose to McCarthy certain exculpatory and impeachment evidence. See Grounds at 5-7. Page 25 With respect to his ineffective assistance of counsel claims, McCarthy contends that Lind's representation was deficient in four ways: (1) Lind failed to interview Stephen Mayka, an attorney from the Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy proceeding for Discount Harry. See id. at 1 (Ground 1). (2) He failed to interview Janet Kibrick, the Director of Personnel at Lloyd's from September 1995 to February 1997. See id. at 2-3 (Ground 2). (3) He failed to move for a new trial based on "new" evidence supplied by Kibrick. See id. at 4 (Ground 3). (4) He miscalculated McCarthy's maximum sentence exposure at 48 months. See id. at 8 (Ground 7).

  For his Brady claims, McCarthy asserts that the Government failed to disclose to him certain statements made by Kibrick, Diane Caputo (Kibrick's daughter), and John Numchek (an individual purportedly familiar with the Med-Ox/Westchester Medical transaction). See id. at 5-7 (Grounds 4-6).

  In support of his petition, McCarthy submitted a portion of an affidavit from Kibrick. See Affidavit of Janet Kibrick, dated May 16, 2003 ("Kibrick 2003 Aff") (reproduced as Ex. B to Letter from Robert McCarthy to the Hon. Gabriel W. Gorenstein, dated July 15, 2003 ("McCarthy Ltr. I")). No other affidavits or documentary evidence were submitted. On August 12, 2003, this Court ordered Lind to submit an affidavit addressing the following two issues: (1) "Whether Mr. Lind was aware of [Kibrick]; if so, the approximate date on which he became aware of her and whether any investigation was conducted to evaluate her potential testimony; the results of any such evaluation; and the reason(s) for the decision not to call her at trial"; and (2) "Whether Mr. Lind estimated McCarthy's possible sentence exposure were he to go to trial; Page 26 the nature of such estimate; and discussions with McCarthy regarding the decision to enter into a plea." Order, filed August 12, 2003 (Docket #76), at 1.

  As is described in greater detail in section III.B below, Lind responded to the Order with an affidavit dated September 4, 2003. See Affidavit of Richard B. Lind, filed September 8, 2003 (Docket #78) ("Lind Aff"). In his affidavit, Lind addressed the two requested issues and also submitted as an exhibit a 1996 affidavit of Kibrick. See Affidavit of Janet Kibrick, dated March 5, 1996 ("Kibrick 1996 Aff") (reproduced as Ex. A to Lind Aff). McCarthy responded to Lind's affidavit with a letter dated September 11, 2003. See Letter from Robert McCarthy to the Hon. Gabriel W. Gorenstein, dated September 11, 2003 (Docket #79) ("McCarthy Ltr. II"). In this letter, McCarthy refutes some of the statements made in Lind's affidavit and also makes statements concerning why Lind was ineffective for failing to move for a new trial. See id. at 1-2.

  The Government responded to McCarthy's letter on September 19, 2003, setting forth reasons why it did not commit any Brady violations. See Letter from Cynthia K. Dunne, Assistant United States Attorney, to the Hon. Gabriel W. Gorenstein, dated September 19, 2003 ("AUSA Ltr."). Lind also responded to McCarthy's letter, refuting McCarthy's statements that he was ineffective for failing to move for a new trial. See Letter from Richard B. Lind to the Hon. Gabriel W. Gorenstein, dated September 19, 2003 ("Lind Ltr."). In his most recent submissions to this Court, McCarthy has responded to Lind's letter and to the Government's letter. See Letter from Robert McCarthy to the Hon. Gabriel W. Gorenstein, dated September 24, 2003; Letter from Robert McCarthy to the Hon. Gabriel W. Gorenstein, dated September 25, Page 27 2003. The letters are being docketed herewith and have been considered by the Court, to the extent they are relevant, in addressing McCarthy's claims.

 II. APPLICABLE LEGAL PRINCIPLES

  A. Law Governing Petitions Under 28 U.S.C. § 2255

  28 U.S.C. § 2255 provides:

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.
Relief under § 2255 is available "only for a constitutional error, a lack of jurisdiction in the sentencing court, or an error of law or fact that constitutes a fundamental defect which inherently results in [a] complete miscarriage of justice." Graziano v. United States, 83 F.3d 587, 590 (2d Cir. 1996) (per curiam) (internal quotation marks and citation omitted).

  In considering a § 2255 petition, "[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. However, even when a hearing maybe warranted, "`the statute itself recognizes that there are times when allegations of facts outside the record can be fully investigated without requiring the personal presence of the prisoner.'" Chang v. United States, 250 F.3d 79, 85 (2d Cir. 2001) (quoting Machibroda v. United States, 368 U.S. 487, 495 (1962)); see 28 U.S.C. § 2255 ("A court may entertain and determine such motion without requiring the production of the prisoner at the hearing."). Depending on the allegations in the Page 28 petition, a "court may use methods under [§] 2255 to expand the record without conducting a full-blown testimonial hearing." Chang, 250 F.3d at 86 (citing Blackledge v. Allison, 431 U.S. 63, 81-82 (1977)). Potential methods available to a court to supplement the record include "`letters, documentary evidence, and, in an appropriate case, even affidavits.'" Id. (quoting Raines v. United States, 423 F.2d 526, 529-30 (4th Cir. 1970)).

  B. Law Governing Ineffective Assistance of Counsel Claims

  "In order to prove ineffective assistance, [a petitioner] must show (1) `that counsel's representation fell below an objective standard of reasonableness'; and (2) `that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different.'" Pham v. United States, 317 F.3d 178, 182 (2d Cir. 2003) (quoting Strickland v. Washington, 466 U.S. 668, 688 (1984)); accord United States v. Guevara, 277 F.3d 111, 127 (2d Cir. 2001): see Massaro v. United States, 123 S.Ct. 1690, 1694 (2003) ("[A] defendant claiming ineffective counsel must show that counsel's actions were not supported by a reasonable strategy and that the error was prejudicial.").

  In evaluating the first prong — whether counsel's performance fell below an objective standard of reasonableness — "`[j]udicial scrutiny . . . must be highly deferential'" and "`every effort [must] be made to eliminate the distorting effects of hindsight, to reconstruct the circumstances of counsel's challenged conduct, and to evaluate the conduct from counsel's perspective at the time.'" Bell v. Cone, 535 U.S. 685, 698 (2002) (quoting Strickland, 466 U.S. at 689); see Dunham v. Travis, 313 F.3d 724, 730 (2d Cir. 2002) (according counsel a presumption of competence); Guevara, 277 F.3d at 127 (same). Concerning the second prong — whether there is a reasonable probability that, but for counsel's unprofessional errors, the result Page 29 of the proceeding would have been different — the Second Circuit generally "requires some objective evidence other than defendant's assertions to establish prejudice." Pham, 317 F.3d at 182 (citing United States v. Gordon, 156 F.3d 376, 380-81 (2d Cir. 1998) (per curiam)).

  C. Law Governing Brady Claims

  In order to establish a violation of Brady v. Maryland, 373 U.S. 83 (1963), "[t]he evidence at issue must be favorable to the accused, either because it is exculpatory, or because it is impeaching; that evidence must have been suppressed by the State, either willfully or inadvertently; and prejudice must have ensued." Strickler v. Greene, 527 U.S. 263, 281-82 (1999); accord United States v. Gil, 297 F.3d 93, 101 (2d Cir. 2002). In addition, for prejudice to have resulted any such exculpatory or impeachment evidence must have been material. See Brady, 373 U.S. at 87 (evidence must be "material either to guilt or to punishment"); United States v. Coppa, 267 F.3d 132, 139 (2d Cir. 2001) ("[A] Brady violation occurs only where the government suppresses evidence that `could reasonably [have been] taken to put the whole case in such a different light as to undermine confidence in the verdict.'" (alteration in original) (quoting Kyles v. Whitley., 514 U.S. 419, 435 (1995))).

 III. DISCUSSION

  A. McCarthy's Brady Claims

  McCarthy's allegations of Brady violations concern three persons — Kibrick, Numchek, and Caputo — each of whom allegedly provided a statement to the Government that would have either cast doubt on McCarthy's guilt or impeached prosecution witnesses — most notably, Hickey and Kelder. Specifically, McCarthy alleges that the Government violated Brady by not disclosing to him the following statements: (1) A statement from Kibrick that would have Page 30 demonstrated that McCarthy did not have the requisite intent to commit fraud. According to McCarthy, in this statement Kibrick informed the Government that Hickey had advised McCarthy and others that it was legal to use the Employee Benefit Plans to pay down the Fleet Mortgage. See Grounds at 5 (Ground 4). (2) A statement from Numchek that would have demonstrated that the Med-Ox transaction with Westchester Medical was intended to benefit Lloyd's and not McCarthy himself. See id., at 6 (Ground 5). (3) A statement from Caputo that would have shown that Kelder and Mr. Lloyd knew that the Employee Benefit Plans "were borrowed and that the intended security for this borrowing was good and valid." Id. at 7 (Ground 6). The Government has asserted that none of the statements were exculpatory. See AUSA Ltr. at 2-3.

  This Court need not consider the merits of McCarthy's Brady claims, however, because he never raised them on direct appeal to the Second Circuit; thus, he may not now assert them in the instant petition. Case law makes clear that claims not raised on direct appeal may not be raised in a subsequent proceeding under 28 U.S.C. § 2255 absent cause and prejudice for the default, or a showing of "actual innocence." See, e.g., Bousley v. United States, 523 U.S. 614, 622 (1998); DeJesus v. United States, 161 F.3d 99, 102 (2d Cir. 1998); Marone v. United States, 10 F.3d 65, 67 (2d Cir. 1993) (per curiam). Cause "`must be something external to the petitioner, something that cannot be fairly attributed to him.'" Marone, 10 F.3d at 67 (quoting Coleman v. Thompson, 501 U.S. 722, 753 (1991)).

  McCarthy could show "cause" for his procedural default by showing that the factual bases underlying the statements at issue were unavailable to him or his counsel prior to his direct appeal. See, e.g., McCleskev v. Zant, 499 U.S. 467, 497-98 (1991); Murray v. Carrier, Page 31 477 U.S. 478, 488 (1986); United States v. Helmslev, 985 F.2d 1202, 1206 (2d Cir. 1993). But McCarthy's submissions make no allegation that he came into possession of such information only after his appeal. Indeed, he gives no indication of when he actually discovered — let alone could have discovered — the alleged Brady violation. He states without explanation that he believes Kibrick gave exculpatory information to the Government, see, e.g., McCarthy Ltr. I at 5, but he does not state when or how he learned of this fact. While he asserts Lind was ineffective for failing to interview Kibrick at the time of his trial, see, e.g., Grounds at 2-3, that contention is analytically separate from his allegation of Brady violations and is discussed in the next section.

  Moreover, the Government has stated, without contradiction, that Orin Snyder and Robert Chan, who represented McCarthy prior to Lind, not only were actually present during the entirety of the Government's interviews of Kibrick and Caputo but also had actually arranged for these interviews to take place. AUSA Ltr. at 2. This makes it even more clear that McCarthy has failed to provide "cause" for why any claimed Brady violation was not raised on direct appeal.

  McCarthy theoretically could demonstrate "cause" for his failure to raise the Brady claims on direct appeal if either his appellate counsel, Jason Brown, had been ineffective or there had since been a change in the law governing Brady violations. See Ramirez v. United States, 2002 WL 31654982, at *4 (S.D.N.Y. Nov. 21, 2002) ("A petitioner may only prove `cause' by successfully asserting a change in the law or ineffective assistance of appellate counsel." (citing, inter alia, Underwood v. United States, 15 F.3d 16, 18(2d Cir. 1993); Barton v. United States, 791 F.2d 265, 267 (2d Cir. 1986) (per curiam))). Since McCarthy's conviction, however, there has been no change in Brady law that could establish "cause." Moreover, McCarthy has not claimed and there is nothing to suggest that Brown's representation was deficient in any way or Page 32 that Brown acted unreasonably in not presenting McCarthy's Brady claims to the Second Circuit. See Strickland, 466 U.S. at 689 (a court must "indulge a strong presumption that [appellate] counsel's conduct falls within the wide range of reasonable professional assistance"). Thus, McCarthy has not demonstrated "cause" for his failure to raise the Brady claims on direct appeal to the Second Circuit. It is therefore unnecessary to determine whether he could demonstrate prejudice.*fn2 Page 33

   In sum, because McCarthy never raised his Brady claims on direct appeal to the Second Circuit, and because he has not demonstrated either cause for the default or actual innocence, he may not now assert his Brady claims in the instant petition. Accord Mendez v. United States, 2002 WL 1402321, at *6 (S.D.N.Y. June 28, 2002) (petitioner's Brady claim was procedurally barred because, inter alia, he failed to raise the issue on direct appeal even though he was aware of it at that time).

   B. McCarthy's Ineffective Assistance of Counsel Claims

   McCarthy's remaining claims concern the alleged ineffectiveness of Lind, McCarthy's trial counsel. Specifically, McCarthy alleges four deficiencies in Lind's representation: (1) his failure to interview Stephen Mayka, see Grounds at 1 (Ground 1); (2) his failure to interview Kibrick, see id. at 2-3 (Ground 2); (3) his failure to move for a new trial based on the "new" evidence supplied by Kibrick, see id., at 4 (Ground 3); and (4) his miscalculation of McCarthy's maximum sentence exposure at 48 months, see id., at 8 (Ground 7). None of these claims was raised on direct appeal to the Second Circuit. See generally Def. App. Brief at 21-61. Nevertheless, claims of ineffective assistance of counsel, even if not raised on direct appeal, are reviewable in a petition under § 2255. See Massaro, 123 S.Ct. at 1696. Each claim is discussed in turn.

   1. Lind's Failure to Interview Mayka

   McCarthy claims that Lind was deficient for failing to interview Stephen Mayka, an attorney from the Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy proceeding for Discount Harry. According to McCarthy, Mayka would have disclosed that he had told McCarthy that it was permissible to "invest" the monies in the Discount Harry Account, Page 34 the trust fund account used for paying Discount Harry's creditors. Thus, according to McCarthy, Mayka would have revealed that McCarthy did not have the requisite intent to commit "fraud." See Grounds at 1 (Ground 1).

   As with all ineffective assistance of counsel claims, a petitioner must show deficient representation and prejudice resulting therefrom. See, e.g., Strickland, 466 U.S. at 688. The Court need not consider the issue of deficient representation, however, because McCarthy has not shown that he was prejudiced by Lind's failure to interview Mayka. See id. at 697 ("If it is easier to dispose of an ineffectiveness claim on the ground of lack of sufficient prejudice,. . . that course should be followed."). McCarthy cannot demonstrate prejudice because he has not produced any evidence or even alleged that Mayka would have testified at trial. "Courts have viewed claims of ineffective assistance of counsel skeptically when the only evidence of the import of a missing witness' testimony is from the [petitioner]." Croney v. Scully, 1988 WL 69766, at *2 (E.D.N.Y. June 13, 1988) (citation omitted), aff'd, 880 F.2d 1318 (2d Cir. 1989), and thus have refused to entertain claims of ineffective assistance for failure to interview a witness where the petitioner fails to demonstrate that the witness would have testified at trial. See, e.g., Stewart v. Nix, 31 F.3d 741, 744 (8th Cir. 1994) ("To prove prejudice from a trial attorney's failure to investigate potential witnesses, a petitioner must show that the uncalled witnesses would have testified at trial. . . ." (citing Lawrence v. Armontrout, 900 F.2d 127, 130 (8th Cir. 1990), cert denied, 513 U.S. 1161 (1995))): Alexander v. McCotter. 775 F.2d 595. 602 (5th Cir. 1985) ("In order for the appellant to demonstrate the requisite Strickland prejudice, the appellant must show not only that this testimony would have been favorable, but also that the witness would have testified at trial." (citations omitted)); Pullman v. United States, 2001 WL Page 35 1640091, at *2 (D. Minn. June 7, 2001) (same); Nicholson v. Cain, 1999 WL 681392, at *5 (E.D. La. Aug. 27, 1999) (same); Cadavid v. United States, 1994 WL 22005, at *9 (D.N.J. Jan. 18) (same), aff'd, 39 F.3d 1168 (3d Cir. 1994); Cronev, 1988 WL 69766, at *2 (same).

   McCarthy has not produced any evidence, such as an affidavit from Mayka, showing that Mayka would have testified at trial to what McCarthy claims he would have. Moreover, he has not produced evidence that Mayka would have testified at all. Thus, McCarthy has failed to demonstrate that Lind's failure to interview Mayka prejudiced him.

   2. Lind's Failure to Interview Kibrick

   McCarthy claims that Lind was ineffective because he failed to interview Janet Kibrick, the Director of Personnel at Lloyd's from September 1995 to February 1997. According to McCarthy, Kibrick would have testified that, contrary to Kelder's testimony at trial, Kelder knew that Alliance was controlled by McCarthy when Kelder wired $300,000 on January 26, 1995 from the Pension Plan Trust to the Alliance Account. In addition, Kibrick would have disclosed that she heard Hickey tell McCarthy and Kelder in a telephone conference in June 1995 that it was legal to use monies from the Employee Benefit Plans to pay down the Fleet Mortgage. Thus, according to McCarthy, Kibrick would have revealed that McCarthy did not have the requisite intent to defraud and, if she testified at trial, would have thrown into question the credibility of Kelder, who testified that he did not believe the transaction was legal, and the credibility of Hickey and O'Reilly, who each testified that they did not advise McCarthy that the transaction was legal. Finally, Kibrick allegedly would have disclosed the existence of Diane Caputo and John Numchek, who, according to McCarthy, would have provided additional information for McCarthy's defense. See Grounds at 2-3 (Ground 2). Page 36

   This claim must be rejected for the same reason as the claim made with respect to Mayka: McCarthy has not submitted any evidence that Kibrick actually would have testified at his trial. As previously noted, McCarthy has submitted a portion of an affidavit from Kibrick. See Kibrick 2003 Aff. But Kibrick does not state in that affidavit that she would have been available and willing to testify at McCarthy's trial.

   In addition, the claim must be rejected because Lind's decision not to interview Kibrick did not represent ineffective assistance of counsel. In her affidavit, Kibrick states that she observed Kelder fax "instructions to [BNY] . . . requesting that State Mutual . . . wire transfer funds" and that, after Kelder faxed these instructions, he stated, "Now [McCarthy] could steal the money." Id. ¶¶ 1-2. In addition, Kibrick states that she overheard Hickey tell McCarthy on June 10, 1995 that using the Employee Benefit Plans to pay off the Fleet Mortgage was "okay." Id. ¶ 5. The remaining paragraphs of her affidavit concern the fact that she told this information to prosecutors prior to trial and that she knew Alliance was controlled by McCarthy. See id. ¶¶ 3-4, 6. Notably, nothing in the affidavit states that she knew that Numchek or Caputo had exculpatory or other information that would have assisted McCarthy in his defense. In fact, the affidavit makes no reference at all to Numchek or Caputo.

   The "failure to call a witness for tactical reasons of trial strategy does not satisfy the standard for ineffective assistance of counsel." United States v. Eyman, 313 F.3d 741, 743 (2d Cir. 2002) (per curiam) (citations omitted), cert. denied, 123 S.Ct. 1949 (2003); accord United States v. Best, 219 F.3d 192, 201 (2d Cir. 2000) ("[C]ounsel's decision as to whether to call specific witnesses — even ones that might offer exculpatory evidence — is ordinarily not viewed as a lapse in professional representation." (internal quotation marks and citation omitted)), cert. Page 37 denied, 532 U.S. 1007 (2001); United States v. Nersesian, 824 F.2d 1294, 1321 (2d Cir.) ("The decision whether to call any witnesses on behalf of the defendant, and if so which witnesses to call, is a tactical decision of the sort engaged in by defense attorneys in almost every trial."), cert. denied, 484 U.S. 958 (1987). This decision "fall[s] squarely within the ambit of trial strategy, and, if reasonably made, will not constitute a basis for an ineffective assistance claim." Nersesian, 824 F.2d at 1321.

   While the choice whether or not to call a particular witness is a strategic choice that is "virtually unchallengeable," counsel "has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary." Strickland, 466 U.S. at 690-91. Thus, "no lawyer could make a `strategic' decision not to interview witnesses thoroughly, because such preparation is necessary in order to know whether the testimony they could provide would help or hinder his client's case, and thus is [a] prerequisite to making any strategic decisions at all." Newton v. Coombe, 2001 WL 799846, at *5 (S.D.N.Y. July 13, 2001); see also Griffin v. Warden. Md. Corr. Adjustment Ctr., 970 F.2d 1355, 1358 (4th Cir. 1992) ("An attorney's failure to present available exculpatory evidence is ordinarily deficient, unless some cogent tactical or other consideration justified it." (internal quotation marks and citation omitted)). Thus, if Lind knew that Kibrick potentially had material favorable to McCarthy's defense and failed to investigate what evidence she may have been able to offer at trial, his representation of McCarthy would have been deficient.

   Lind has submitted to this Court an affidavit indicating his reasons for not interviewing Kibrick and for not calling her as a witness at McCarthy's trial. See Lind Aff. ¶¶ 9-30. According to Lind, McCarthy told him about Kibrick in July or August 1999 and said that "the Page 38 gist of [Kibrick's] testimony would be along the lines of an affidavit [Kibrick] had executed in March 1996," which Lind attached to his affidavit. Id. ¶ 9; see Kibrick 1996 Aff. In Kibrick's March 1996 affidavit, she states that she overheard McCarthy ask Mr. Lloyd if he understood that the monies in the Employee Benefit Plans were going to be used to pay down the Fleet Mortgage, to which Mr. Lloyd responded, "I know, you have to, Bob." Kibrick 1996 Aff. ¶ 4. She also states that "[t]his conversation was consistent with other conversations I had heard at the company prior to that date" and that she knew that Mr. Lloyd and Kelder were aware that the Employee Benefit Plans were being used "for Company purposes." Id. ¶¶ 5-6.

   According to Lind, he believed that most of the contents of Kibrick's 1996 affidavit would be cumulative and inadmissible hearsay at trial. See Lind Aff. ¶¶ 10, 12-16; accord AUSA Ltr. at 3 ("[Kibrick's] alleged marginally relevant testimony would have been inadmissible at trial as a prior inconsistent statement that does not fit within any exception to the hearsay rules."). Additionally, "after investigation, [Lind] perceived potentially troubling drawbacks to [Kibrick's] credibility." Lind Aff. ¶ 17. First, Lind learned that Kibrick had maintained the financial records for Med-Ox while she was a Lloyd's employee. Id. ¶ 19. According to Lind, Kibrick's "involvement with Med-Ox drastically undercut whatever limited usefulness she might have had as a witness, since it could have served to undermine a central theme of [McCarthy's] case, namely that McCarthy had not personally profited from" the $300,000 wire transfer on January 26, 1995 from the Pension Plan Trust to the Alliance Account. Id. ¶ 20. Second, Lind "also found disconcerting the fact that [Kibrick] was promoted almost immediately following the [closing on the Fleet Mortgage]" and "thought a jury might perceive this as a reward to [Kibrick] for acting as a spy for McCarthy in his battle to gain control" of Page 39 Lloyd's. Id. ¶ 21. Third, Lind "found it a little too convenient for [Kibrick] to have overheard all of the matters which she claimed to have heard" in her 1996 affidavit, which he considered "contrived." Id.; accord AUSA Ltr. at 2 n.2 (Kibrick's "current recollection of the conversation that she overheard in 1996 is dramatically different from what she told both the Government and the defense in 1996."). Finally, Lind "was also troubled by the fact that, upon information and belief, [Kibrick] was fired at the same time as was McCarthy" and felt that "a jury might well believe that she might have had a number of motives to testify favorably to McCarthy, including retribution and financial reward." Lind Aff. ¶ 22. In sum, Lind believed that "the limited potential utility of [Kibrick's] testimony was far outweighed by its drawbacks" and therefore "decided not to call her at trial." Id. ¶ 23.

   McCarthy has responded to Lind's affidavit. See McCarthy Ltr. II. In his response, McCarthy indicates (1) that Lind "does not indicate in his affadavit [sic] that he spoke with [Kibrick] at any time prior to the completion of the trial," (2) that "Lind claims that he did an investigation which didn't even include talking to Kibrick," (3) that, were Lind to have interviewed Kibrick, he would have learned that Med-Ox was to be merged into Lloyd's, and (4) that because Lloyd's Board of Directors consisted of Hickey, O'Reilly, Kelder, and Mr. Lloyd, the fact that Kibrick was fired on the same day as McCarthy would have been "consistent with a cohesive defense strategy." Id. at 1-2.

   After considering the above submissions, this Court cannot say that Lind acted unreasonably in not interviewing Kibrick prior to trial, nor that McCarthy has overcome "the presumption that, under the circumstances, the challenged action might be considered sound trial strategy," Strickland, 466 U.S. at 689 (internal quotation marks and citation omitted). None of Page 40 the statements in McCarthy's response to Lind's affidavit suggest that McCarthy was not himself aware of the information Kibrick purportedly would have offered. Although Lind did not actually interview Kibrick, effective representation does not necessarily entail an interview of all individuals whom an attorney might know have knowledge of a relevant fact.

  

[S]trategic choices made after less than complete investigation are reasonable precisely to the extent that reasonable professional judgments support the limitations on investigation. In other words, counsel has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary. In any ineffectiveness case, a particular decision not to investigate must be directly assessed for reasonableness in all the circumstances, applying a heavy measure of deference to counsel's judgments.
Id. at 690-91 (emphasis added); accord United States v. Vargas, 920 F.2d 167, 170 (2d Cir. 1990) (affidavit from co-defendant who allegedly should have been called to testify at trial, and which stated "in conclusory fashion that [defendant] had no knowledge of [co-defendant's] drug-related activities," did not indicate that "the decision not to call [co-defendant] as a defense witness at [defendant's] trial was unreasonable"), cert. denied, 502 U.S. 826 (1991).

   In his submissions to this Court, McCarthy cites in support of his claim Pavel v. Hollins, 261 F.3d 210 (2d Cir. 2001). See McCarthy Ltr. I at 7-8. In Pavel, a child sexual abuse case, the Second Circuit had before it an affidavit from trial counsel indicating his reasons for not calling any witnesses at trial other than the defendant, who was claiming in his petition for writ of habeas corpus under 28 U.S.C. § 2254 that counsel's representation at trial was deficient. 261 F.3d at 212. In that affidavit, counsel indicated the following:

   Prior to [trial], I concluded that the State's case was without merit because I felt that the medical evidence was insufficient to sustain a conviction. As a result, I did not prepare a defense for [the defendant], believing instead that a motion to dismiss the State's case at the close of its evidence in chief would be granted by the Court. Page 41

  Id. at 212 n.2. In fact, the motion was denied by the trial judge and counsel "had not prepared for this eventuality." Id. at 212.

   The court found that counsel's representation was constitutionally deficient. Counsel "decided not to prepare a defense for [the defendant] solely because he was confident that, at the close of the prosecution's presentation of its evidence, the trial judge would grant [his] motion to dismiss the government's charges against [the defendant]. That [counsel] opted not to prepare a defense based entirely on this rationale militates strongly in favor of the conclusion that his representation of [the defendant] was constitutionally deficient." Id. at 216; accord id. at 217-18 (counsel's decision not to call two fact witnesses at trial was motivated "solely because he believed that the motion to dismiss would be granted" and "by a desire to save himself labor — to avoid preparing a defense that might ultimately prove unnecessary"). In addition, that counsel had decided not to interview a medical expert to rebut the prosecution's physical evidence of abuse also favored a finding of ineffective assistance. Id. at 223-25. The court indicated that, because "of the `vagaries of [child] abuse indicia,' such pre-trial investigation and analysis . . . generally require[s] some consultation with an expert." Id. at 224 (quoting Lindstadt v. Keane, 239 F.3d 191, 201 (2d Cir. 2001)). Counsel did not have "the education or experience necessary to assess relevant physical evidence, and to make for himself a reasonable, informed determination as to whether an expert should be consulted or called to the stand." Id.

   Here, McCarthy does not allege nor is there any indication that Lind did not prepare any defense for trial or that the reason he decided not to interview Kibrick was because he pinned McCarthy's acquittal on the wholly speculative belief that he would win the case on other grounds. Indeed, Lind's affidavit reveals that, after learning of Kibrick and of the substance of Page 42 her potential testimony, he conducted an investigation and determined that whatever information she could have offered at trial was outweighed by what his investigation revealed to be a lack of credibility. See generally Lind Aff. ¶¶ 17-23. McCarthy's case ultimately depended upon the jury's positive evaluation of his credibility. Lind's determination, after investigation, that Kibrick's perceived bias and lack of credibility could have damaged McCarthy's case was not unreasonable under the circumstances. In other words, Lind could have reasonably determined that, no matter what Kibrick would have said in an interview, the statements in her 1996 affidavit, combined with her prior connection to McCarthy, rendered any exculpatory testimony she had to offer useless. Finally, unlike the situation in Pavel, no such specialized experience or education was necessary to make this determination. In a situation such as Lind was faced with here, counsel may make a reasonable assessment of credibility based on extrinsic information and without necessarily conducting an interview.

   Judging this matter from Lind's perspective at the time of trial, and in light of the "highly deferential" nature of this Court's review, Bell, 535 U.S. at 698 (citing Strickland, 466 U.S. at 689), Lind's determination that interviewing Kibrick was unnecessary was not an unreasonable one. Because the Court concludes that Lind acted reasonably, we need not consider whether McCarthy was prejudiced, i.e., whether there is a reasonable probability that the outcome of the trial would have been different in light of Kibrick's proffered testimony, see Strickland, 466 U.S. at 694.

   Accordingly, the Court finds that Lind was not ineffective for failing to interview Kibrick. Page 43

   3. Lind's Failure to Move for a New Trial

   McCarthy claims that Lind was ineffective for failing to move for a new trial based on the "new" evidence supplied by Kibrick concerning an alleged telephone conference in June 1995, in which she allegedly heard Hickey tell McCarthy and Kelder that it was legal to use monies from the Employee Benefit Plans to pay down the Fleet Mortgage. See Grounds at 4 (Ground 3). McCarthy claims that Kibrick "reminded" him of the telephone conference within seven days following the verdict and that, after relaying this information to Lind, Lind stated, "I will not shoot myself in the foot," and refused to bring it to Judge Parker's attention. Id. While Lind denies that such a conversation ever took place, see Lind Ltr. at 2, it is not necessary to resolve this factual dispute in deciding McCarthy's claim.

   The Federal Rules of Criminal Procedure provide that a "court may vacate any judgment and grant a new trial if the interest of justice so requires." Fed.R.Crim.P. 33(a). If the motion is grounded on the discovery of "new" evidence, a defendant must file the motion within three years of the verdict. Fed.R.Crim.P. 33(b)(1). "Relief is justified under rule 33 if the defendant makes a showing that the evidence is in fact `new', i.e., it could not have been discovered, exercising due diligence, before or during trial." United States v. Siddiqi, 959 F.2d 1167, 1173 (2d Cir. 1992) (citations omitted): accord United States v. Gallego, 191 F.3d 156, 161 (2d Cir. 1999), cert, denied, 530 U.S. 1216 (2000); United States v. Moore, 54 F.3d 92, 99 (2d Cir. 1995), cert. denied, 516 U.S. 1081 (1996). Additionally, granting a motion for a new trial based on "new" evidence is generally disfavored. See, e.g., Spencer, 4 F.3d at 118 ("[A] district court must exercise great caution in determining whether to grant a retrial on the ground of newly Page 44 discovered evidence, and may grant the motion only in the most extraordinary circumstances." (internal quotation marks and citation omitted)).

   As discussed above in footnote 2 (section III.A), the testimony Kibrick allegedly would have provided cannot be considered "new" within the meaning of Rule 33. McCarthy has failed to rebut Lind's statements that McCarthy had informed Lind of Kibrick prior to trial and that "the gist of her testimony would be along the lines of an affidavit [she] had executed in March 1996," Lind Aff. ¶ 9. Furthermore, as a participant in the alleged telephone conference, McCarthy certainly knew of the contents of the conversation prior to trial. Thus, it cannot be said that Kibrick's testimony "could not have been discovered, exercising due diligence[,] before or during trial," Spencer, 4 F.3d at 119. Because this evidence could not have been grounds for a Rule 33 motion for a new trial, Lind was not ineffective for failing to move for one based on it.

   4. Lind's Failure to Correctly Calculate McCarthy's Sentence Exposure

   McCarthy's final ground alleges that Lind was ineffective for miscalculating McCarthy's maximum sentence exposure at 48 months. See Grounds at 8 (Ground 7). According to McCarthy, because of Lind's calculation "there was no particular reason to accept" the prosecution's plea bargain offered on the eve of trial of 30 to 36 months imprisonment. Id. McCarthy was subsequently sentenced to 78 months imprisonment, (Sentencing Tr. 37), which was affirmed on appeal, see McCarthy, 271 F.3d at 402.

   Lind has responded to McCarthy's allegations. See Lind Aff. ¶¶ 31-39. Lind first states that "McCarthy's recollection on this issue is faulty." Id. ¶ 31. According to Lind, he told McCarthy that, pursuant to United States Sentencing Guidelines, his sentence could range from 33 to 97 months, depending on Judge Parker's resolution of certain disputed factors. See id. Page 45 ¶¶ 32-38. Lind states that he has "no recollection [of telling] McCarthy that his maximum exposure [would be] a flat 48 months." Id. ¶ 38.

   The Second Circuit has indicated that an attorney who "grossly underestimat[es]" a client's sentence exposure "breach[es] his duty as a defense lawyer in a criminal case to advise his client fully on whether a particular plea to a charge appears desirable." Gordon, 156 F.3d at 380 (internal quotation marks and citation omitted). The reason for this is that "[k]nowledge of the comparative sentence exposure between standing trial and accepting a plea offer will often be crucial to the decision whether to plead guilty." Id. (internal quotation marks and citation omitted). Thus, if McCarthy's allegations were true and Lind grossly underestimated McCarthy's sentence exposure, Lind's representation would have fallen "below the prevailing professional norms for advising a client during plea negotiations of his maximum exposure to imprisonment at sentencing," id. (internal quotation marks and citation omitted).

   The Court need not resolve this factual dispute, however, because McCarthy has not demonstrated that but for Lind's alleged error he would have pled guilty. The Second Circuit has made clear that a claim of the kind McCarthy makes lacks merit if the petitioner fails to show that, had the attorney correctly estimated his sentence exposure, he would have accepted the plea offer. See, e.g., Aeid v. Bennett, 296 F.3d 58, 64 (2d Cir.), cert. denied, 537 U.S. 1093 (2002); accord Smith v. McGinnis, 2003 WL 21488090, at *4 (S.D.N.Y. June 25, 2003) ("To succeed on his claim, petitioner . . . must affirmatively demonstrate prejudice by showing a reasonable probability that, but for his counsel's failure to advise him of the desirability of taking [the plea offer], petitioner would have accepted the offer." (internal quotation marks and citation omitted)). Page 46

   In Purdv v. Zeldes, 337 F.3d 253, 260 (2d Cir. 2003), the Second Circuit clarified that a petitioner need not affirmatively present "objective evidence" that he would have accepted a plea and may simply rely on his own unsubstantiated testimony. See also id. at 259 (discussing a court's "responsibility to actually make a credibility finding in each case, even absent objective evidence," but noting that "in most circumstances a convicted felon's self-serving testimony is not likely to be credible"). But while a petitioner need not present independent, "objective evidence" that he would have accepted the plea, he must nonetheless still aver that he would have accepted it. In rejecting an ineffective assistance claim, Aeid noted that the petitioner had

  

never asserted that he would have accepted an offer of 7 1/2 to 15 years of imprisonment. This is a critical omission in light of Hill v. Lockhart, [474 U.S. 52, 60 (1985)], in which the United States Supreme Court held that the defendant had failed adequately to allege prejudice where he had failed to "allege in his habeas petition that, had counsel correctly informed him about his parole eligibility date, he would have not pleaded guilty and [would have] insisted on going to trial." Thus, while [the petitioner in Hill] accepted a plea bargain and [the petitioner in this case] rejected one, both claims suffer from the same defect: failure to allege that correct advice from defense counsel would have altered the defendant's decision.
296 F.3d at 64; see also Smith, 2003 WL 21488090, at *4 (denying petition because, "[e]ven if I accepted petitioner's claim that his counsel failed to advise him of the desirability of the 2 to 4 year plea offer, I find little evidence that had he been advised, there was a reasonable probability that he would have accepted the plea when it was offered").

   McCarthy has offered several submissions to this Court in support of his petition. Nowhere in these submissions, however, does McCarthy state that had Lind properly calculated his sentence exposure he would have accepted the offered plea. At most, McCarthy states merely that "since [Lind] calculated my sentence exposure to be four years (48 months) there was no Page 47 particular reason to accept [the Government's] offer," Grounds at 8 (Ground 7), and that "[c]ourts have long recognized that guilty pleas are sometimes entered by innocent people to avoid cost and reduce jail time when their defense is not provable," McCarthy Ltr. II at 2. Neither of these statements shows, however, that McCarthy would have accepted a plea.

   Moreover, any such statement now would be unworthy of credence for at least two reasons. First, Lind has stated that McCarthy "wanted to have his day in court," "insisted on telling his version of events," and "adamantly rejected any and all plea offers from the Government." Lind Aff. ¶ 39. Although McCarthy responded to Lind's affidavit, see McCarthy Ltr. II, he did not refute or otherwise question Lind's recollections.

   Second, McCarthy's continued protestations of innocence in the face of a guilty verdict would undercut any claim that he would have entered into a plea of guilty. See, e.g., Custodio v. United States, 945 F. Supp. 575, 579 (S.D.N.Y. 1996) ("[Petitioner] continues to maintain his innocence. . . . In the face of that assertion, his belated claim that he would have pleaded guilty is frivolous." (citations omitted)); Keats v. United States, 856 F. Supp. 162, 166 (S.D.N.Y. 1994) ("In the face of [petitioner's] assertions [of innocence] his belated claim that he would have pleaded guilty lacks any semblance of credibility."), aff'd, 50 F.3d 3 (2d Cir. 1995); see also Scire v. United States, 1997 WL 138991, at *12 (E.D.N.Y. Mar. 24, 1997) ("[Petitioner] asserts that he is not guilty of the crimes of which he was convicted. Therefore, [petitioner] fails entirely to demonstrate that he would have accepted a plea offer."). McCarthy's papers are replete with such claims of innocence. See, e.g., Grounds at 1 (Ground 1) ("I thought I was acting legally and . . . I did not have any intent to commit fraud."); id., at 3 (Ground 2) ("I did not believe I was acting either illegally or recklessly. There was no intent to defraud on my part."); Specific Page 48 Factual Allegations with Trial Transcript References, dated July 15, 2003 (reproduced as Ex. A to McCarthy Ltr. I), at 1 ("McCarthy maintains that during the events leading to his convictions that he was acting under the advice of Counsel at all times.").

   In sum, even if the Court were to accept the assertion that Lind grossly underestimated McCarthy's sentence exposure, McCarthy has not demonstrated that he was prejudiced by it.

  Conclusion

   Because the record of the case, including the submissions during the pendency of this petition, conclusively shows that all of McCarthy's claims are meritless, no evidentiary hearing is required. McCarthy's petition should be denied.

  

PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
   Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (e). Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with copies sent to the Hon. Lewis A. Kaplan, 500 Pearl Street, New York, New York 10007, and to the undersigned at 40 Centre Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Kaplan. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985).


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