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United States v. Rutigliano

United States Court of Appeals, Second Circuit

April 4, 2018

United States of America, Appellee-Cross-Appellant,
v.
Joseph Rutigliano, Peter J. Ajemian, Marie Baran, Peter J. Lesniewski, Defendants-Appellants-Cross-Appellees, Maria Rusin, Gregory Noone, Regina Walsh, Sharon Falloon, Gary Satin, Steven Gagliano, Richard Ehrlinger, BrianDelgiorno, Philip Pulsonetti, Gregory Bianchini, Frank Plaia AKA Franklin Plaia, Michael Dasaro, Karl Brittel, Kevin Nugent, Gary Supper, Thomas Delalla, Michael Stavola, Defendants.

          Argued: November 29, 2017

          On Appeal from the United States District Court for the Southern District of New York

         On cross appeals from a judgment of the United States District Court for the Southern District of New York (Marrero, J.), entered pursuant to 28 U.S.C. § 2255, the parties challenge a reduction in the defendants' restitution obligations as imposed in their original judgments of conviction. Defendants argue that even the reduced restitution amounts are not supported by the record. The government argues that § 2255 does not authorize, nor do the facts warrant, any reduction in restitution. We agree with the government. Consistent with this court's controlling precedent, we conclude that § 2255 jurisdiction does not reach the restitution part of a sentence where, as here, the restitution cannot be deemed custodial punishment. It is not the amount of restitution alone but, rather, the terms of payment that identify those rare cases in which a restitution order might equate to custodial punishment. Because the challenged judgments here contemplate the payment of restitution on schedules yet to be set by the district court, defendants cannot show on the present record that their restitution obligations are custodial punishments for purposes of § 2255 review. Accordingly, the judgment reducing restitution must be vacated, and the case is remanded for reinstatement of the original judgments. No different conclusion is warranted for defendant Baran, who also invoked coram nobis to seek relief from restitution. Although the district court did not rule on Baran's coram nobis petition, there is no need for it to do so on remand because Baran identifies no fundamental error in her original restitution sentence, as necessary for coram nobis relief.

         Vacated and Remanded.

          Daniel B. Tehrani, Assistant United States Attorney (Karl Metzner, Assistant United States Attorney, on the brief), for Geoffrey S. Berman, United States Attorney for the Southern District of New York, New York, New York, for Appellee-Cross-Appellant.

          Joseph W. Ryan, Jr., Law Offices of Joseph W. Ryan, Jr., Melville, New York, for Defendant-Appellant-Cross-Appellee Joseph Rutigliano.

          Sean M. Maher, Law Offices of Sean M. Maher, PLLC, New York, New York, for Defendant-Appellant-Cross-Appellee Peter J. Ajemian.

          John D. Cline, Law Office of John D. Cline, San Francisco, California (Thomas A. Durkin, Durkin & Roberts, Chicago, Illinois, on the brief), for Defendant-Appellant-Cross- Appellee Peter J. Lesniewski.

          Marie Baran, pro se, Danbury, Connecticut.

          Before: Jacobs, Raggi, Droney, Circuit Judges.

          Reena Raggi, Circuit Judge

         Defendants Joseph Rutigliano, Peter J. Ajemian, Peter J. Lesniewski, and Marie Baran stand convicted in the United States District Court for the Southern District of New York (Victor Marrero, Judge) for participating in a massive scheme to defraud the United States Railroad Retirement Board ("RRB") by filing fraudulent disability pension applications on behalf of Long Island Rail Road ("LIRR") employees. See United States v. Ajemian, No. 11 Cr. 1091 (S.D.N.Y.), Dkt. Nos. 401, 592, 649, 704. Defendants here appeal from a subsequent judgment of the same court, entered on November 1, 2016, which, in response to their motions for vacatur of sentence pursuant to 28 U.S.C. § 2255, amended each defendant's sentence in part to reduce original restitution obligations: for Rutigliano from $82, 356, 348 to $42, 317, 076; for Ajemian from $116, 500, 000 to $53, 494, 797; for Lesniewski from $70, 632, 900 to $34, 237, 476; and for Baran from $31, 398, 907 to $21, 467, 954. See United States v. Ajemian, No. 11 Cr. 1091 (VM), 2016 WL 6820730, at *3-4 (S.D.N.Y. Nov. 1, 2016). Defendants argue that even these reduced amounts are not supported by record evidence. The government cross-appeals, arguing that § 2255 does not authorize, nor do the facts warrant, any reduction of the restitution parts of defendants' sentences. The government further argues that the certificate of appealability granted defendants in this case does not reach their restitution challenges; that Ajemian waived any challenge to restitution in his plea agreement; and that, insofar as Baran had already filed one unsuccessful § 2255 motion, she had not secured the necessary leave to file a successive petition.

         We need not reach the government's last three arguments because we are persuaded by its first. We conclude that § 2255 does not authorize district courts to hear collateral challenges to the restitution parts of criminal sentences where, as here, restitution obligations do not equate to custodial punishment. Accordingly, we vacate the § 2255 judgment reducing defendants' restitution obligations as imposed in their original judgments of conviction, and we remand for reinstatement of the original judgments. To the extent defendant Baran also invoked coram nobis to seek relief from restitution, the district court did not address that claim, but no remand is necessary for that purpose because Baran cannot show fundamental error in the original order of restitution.

         BACKGROUND

         I. Defendants' Convictions and Original Sentences

         The fraud scheme for which defendants stand convicted sought to take advantage of a disability pension plan made available to LIRR employees by the RRB. The LIRR's own pension plan allowed employees with 20 or more years of service to retire as early as age 50 and to receive payments equal to half their pre-retirement income. When an employee reached age 62 or 65, he was eligible for an additional retirement pension from the RRB. The RRB also offered disability pensions to employees of any age who were no longer able to work, for which payments began immediately upon approval of a disability claim.

         As part of a decades-long scheme to defraud the RRB, defendants Rutigliano, Ajemian, Lesniewski, and Baran, together with 17 confederates, repeatedly submitted applications for disability pensions based on fabricated medical documents. Orthopedic physicians Ajemian and Lesniewski created these fabricated documents. Rutigliano, a former LIRR conductor and union local president, obtained a disability pension for himself by submitting false documentation of his physical condition from Lesniewski. Rutigliano also acted as a facilitator or consultant for numerous other LIRR employees seeking disability pensions, charging approximately $1, 000 per person to fill out fraudulent applications. Baran, a former RRB employee whose LIRR-employed husband obtained an RRB disability pension through a fraudulent application supported by Lesniewski, also acted as a facilitator-for-hire, submitting disability pension applications for LIRR employees that she knew were supported by fraudulent documentation.

         On January 18, 2013, Ajemian entered into an agreement with the government and pleaded guilty to conspiracy to commit mail, wire, and health care fraud, as well as substantive health care fraud. See 18 U.S.C. §§ 1347, 1349. On May 24, 2013, the district court sentenced Ajemian inter alia to 96 months' imprisonment and ordered $116, 500, 000 restitution, the amount identified in his plea agreement. Further consistent with that agreement, Ajemian did not challenge his conviction or any part of his sentence on direct appeal.

         Rutigliano, Lesniewski, and Baran stood trial and, on August 6, 2013, a jury found them guilty of multiple conspiratorial and substantive counts of mail, wire, and health care fraud. See id. §§ 371, 1341, 1343, 1347, 1349. The district court sentenced Rutigliano and Lesniewski inter alia to 96 months' imprisonment each and to $82, 356, 348 and $70, 632, 900 in restitution respectively. It sentenced Baran inter alia to 60 months' imprisonment and $31, 398, 907 restitution.

         The restitution amounts ordered were based on data compiled by Natasha Marx, an Auditor in the Office of the RRB Inspector General, and reflected disability pension payments made to identified LIRR annuitants-for whom each defendant had submitted or supported fraudulent claims-as of the dates the RRB terminated their disability pensions due to the discovery of the fraud.

         Rutigliano, Lesniewski, and Baran unsuccessfully challenged their convictions, including their sentences, on direct appeal. See United States v. Rutigliano, 790 F.3d 389 (2d Cir. 2015); United States v. Rutigliano, 614 Fed.Appx. 542 (2d Cir. 2015).

         II. The RRB Board Orders and Post-Termination Approvals

         Defendants submit that post-conviction actions by the RRB constitute new evidence supporting the instant collateral challenges to their convictions and ...


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