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Levy v. United States

United States District Court, S.D. New York

April 13, 2017

DONNA LEVY, Petitioner,

          OPINION & ORDER

          HONORABLE PAUL A. CROTTY, United States District Judge

         Following a three-week trial, a jury convicted Donna Levy on March 21, 2013 of all five counts charged against her in a securities and mail fraud pump and dump scheme involving millions of dollars. On February 19, 2014, the Court sentenced Mrs. Levy to 66 months in prison. Mrs. Levy now petitions, pursuant to 28 U.S.C. § 2255, for a reduction in her sentence and for her immediate release ("Petition"). She asserts that her counsel was ineffective for failure to advise her properly about a guilty plea or cooperation agreement. There is no merit to her Petition; and for the reasons stated below, the Court denies the Petition.


         On October 4, 2010, the government filed a complaint against Mrs. Levy and ten other individuals. Dkt. 1. On January 19, 2011, the government filed an indictment naming Mrs. Levy and six other individuals as defendants. Dkt. 86. On December 21, 2011, the government filed a third superseding indictment and added Mrs. Levy's husband, David Levy, as a defendant. Dkt. 134. On June 28, 2012, the government filed a fifth superseding indictment against Mr. and Mrs. Levy and one other defendant (the "'Indictment"). Dkt. 188. The Indictment charged Mrs. Levy with two counts of conspiracy to commit securities fraud and wire fraud, and three counts of securities fraud. The charges in the Indictment related to pump and dump schemes orchestrated by Donna and David Levy.

         In total, 13 defendants have been charged in this matter. The Levys are the only two defendants that have so far proceeded to trial. By the time the Levys' trial started on March 5, 2013, 10 of the 13 defendants had pleaded guilty. All 10 of the defendants that pleaded guilty have since been sentenced.[1] Five-Ricardo Fernandez, Stinson Bland, William Mackey, Thomas Prezioso, and Bradley Susser-received sentences of between 6 and 18 months imprisonment ("Pleading Defendants"), and the other five-Jeffrey Halbirt, Jeffrey Hurwitt, Michael Steinberg, Michael Oiring, and Fotis Georgiadis-received 5K1 letters and sentences of time served ("Cooperating Defendants").

         On March 21, 2013, the Levys were found guilty of all charges against them. Following conviction, the Levys moved pursuant to Fed. R. Crim. P. 29 for a judgment of acquittal, and in the alternative, pursuant to Fed. R. Crim. P. 33 for a new trial. On July 15, 2013, the Court denied the Levys' motions. Mr. Levy was sentenced to 108 months in prison on January 24, 2014, and Mrs. Levy was sentenced to 66 months in prison on February 19, 2014.

         The Levys appealed their convictions. Mrs. Levy challenged (1) the legal sufficiency of the trial evidence relating to market manipulation; (2) the Court's jury instruction on market manipulation; (3) the Court's decision not to instruct the jury on puffery and the "bespeaks caution" doctrine; (4) the legal sufficiency of the trial evidence relating to material misrepresentations; and (5) the Court's decision to not allow Mrs. Levy's counsel to cross examine two adverse witnesses. She also adopted the arguments raised in Mr. Levy's appeal that the Court erred: (1) in its jury instruction on burden of proof; (2) in refusing to suppress wiretap and derivative evidence; (3) in admitting evidence seized pursuant to a search warrant; (4) in finding a border search legal; and (5) in its restitution orders. On November 17, 2015, the Second Circuit entered its mandate affirming the Court's final judgments. Dkt. 451.

         The thrust of Mrs. Levy's Petition is that her prior counsel was ineffective because they failed to properly advise her of the potential benefits of pleading guilty or cooperating with the government. She asserts that the government made overtures indicating amenability to offering a plea deal or accepting her cooperation prior to trial, but that counsel failed to advise her of, among other things, the government's overtures, the strengths and weaknesses of her case, and the possible sentencing ranges following trial, a plea deal, or cooperation. She contends that if she had been properly advised, she would have cooperated or pleaded guilty.

         On August 3, 2016, the Court directed Mrs. Levy's prior counsel, Howard Srebnick, "to respond to allegations of ineffective assistance of counsel" set forth in Mrs. Levy's Petition. See Dkt. 474. On September 26, 2016, Mr. Srebnick submitted a letter responding to Mrs. Levy's assertions in her Petition about his and Alex Arteaga-Gomez's representation of Mrs. Levy ("Srebnick Letter"). Dkt. 483. Mrs. Levy submitted an affidavit ("Levy Aff") with her Reply papers. Dkt. 492.


         I. Legal Standards

         A. Ineffective Assistance of Counsel

         A federal prisoner may move the sentencing Court under 28 U.S.C. § 2255 to vacate, set aside, or correct an illegally imposed sentence. See 28 U.S.C. § 2255(a). "The Sixth Amendment guarantees a defendant the right to have counsel present at all 'critical' stages of the criminal proceedings, " Missouri v. Frye, 566 U.S. 133, 141 (2012), and a § 2255 petition may be brought on the basis of ineffective assistance of counsel.

         To establish a claim of ineffective assistance of counsel, a defendant must show that (1) "counsel's representation fell below an objective standard of reasonableness;" and (2) "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Strickland v. Wash., 466 U.S. 668, 688, 694 (1984). A defendant's failure to make the required showing under either of the two Strickland prongs is fatal to an ineffective assistance of counsel claim. See Id. at 700.

         Under the first prong, "a court must indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance." Id. at 689. With respect to plea deals, "counsel must communicate to the defendant the terms of the plea offer, and should usually inform the defendant of the strengths and weaknesses of the case against him, as well as the alternative sentences to which he will most likely be exposed." Purdy v. United States, 208 F.3d 41, 45 (2d Cir. 2000) (citations omitted).

         Under the second prong, a defendant asserting ineffective assistance based on the rejection of a plea deal must show that (1) "but for the ineffective advice of counsel there is a reasonable probability that the plea offer would have been presented to the court;" (2) "the court would have accepted its terms;" and (3) "the conviction or sentence, or both, under the offer's terms would have been less severe than under the ...

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