US v. Jamila Davis
Case # Cr-05-483 (Dist. N.J. 2005)
A. Initial District Court Criminal Case
I was indicted in June of 2005 on charges of mortgage fraud based on several mortgage applications I assisted in being facilitated, where straw buyers were used to obtain mortgages greater in value than the purchase price of the property, in order to use the surplus for property repair. False documents supported the applications. The case was notable in that 1) the lender's mortgage servicer (Lehman Bros' agent Aurora Lending) encouraged and guided the false application process, and 2) the government impeded my efforts to mitigate loss by obtaining buyers for the properties post-indictment, subsequently selling those properties to a Lehman Bros. insider at a deep discount. I chose to go to trial on these charges because my lawyer misadvised me. He told me that the false applications weren't fraud where the Aurora mortgage officer in fact knew of the false statements and therefore couldn't have relied on them, and that if I wanted to challenge the loss claimed by Lehman, I had to go to trial. Of course, it turned out my lawyer was dead wrong: the false applications were fraud if a reasonable banker would have relied on them, regardless whether Lehman's agent actually did. And, loss calculation was an issue only for sentencing, not for the guilt or innocence determination made at trial. The Honorable Jose Linares of the US District Court for the District of New Jersey was my judge.
I was convicted by jury verdict on Sept. 20, 2007. I was sentenced on July 16, 2008 to 151 months based on a determination that actual loss was over $14 million (in white collar sentencing, loss amount is the key factor). At my sentencing, my lawyer did not challenge the government's loss estimate, even though we had defense appraisals of the properties that showed by fair market value analysis little or no overall bank loss. Instead, defense counsel only claimed that loss was overstated, and that I should therefore get a downward departure. That meant I had not preserved the core loss issue for appeal.
B. Direct Appeal
My defense counsel handled my direct appeal. The Third Circuit Court of Appeals upheld my conviction on July 1, 2009 (US v. Rickard, 336 Fed. Appx. 235). It rejected the claim that what Aurora in fact relied on was relevant, upholding the lower court's "reasonable lender" standard. The Court stated: "We see no error in the District Court's decision because Petitioner's proposed instruction is not a correct statement of the law." Ibid. It rejected any challenge to my loss calculation because my attorney had not raised it in his opening brief, nor had he preserved the issue at sentencing. The Court stated: "Davis argued for the first time that the total loss resulting from the scheme was incorrectly calculated. Since she did not raise this claim before, we will not consider it." Ibid. Indeed, in my reply brief, my attorney had openly conceded that he made a big mistake not challenging core loss calculation at sentencing: "[I] should have urged the sentencing court to review the calculation of the 'loss amount'...in making the initial guideline calculation of the base offense level, rather than arguing that the loss amount overstated the seriousness of the crime...." March 9, 2009 Reply Brief at p. 15.
II. Section 2255 Motion to Correct/Vacate Sentence
On September 28, 2010, I filed a Petition to Vacate, Set Aside or Correct Sentence under 28 USC 2255 (a habeas petition). I raised about 7 issues - that the bank funds weren't FDIC-insured, and that lawyer represented me ineffectively because he misadvised me on materiality, failed to litigate loss, failed to object to restitution, failed to adequately review discovery, failed to interview certain witnesses and experts, and failed to raise a critical appeal issue (loss).
My defense counsel responded by an affidavit attached to the government's answer. He said that it didn't matter what he advised me on materiality because the trial outcome wouldn't have been different. He breezed over the other points, claiming that he did cover loss adequately. The advice issue was key. Under Third Circuit law (US v. Day, 969 F.2d 39 (1992), when a lawyer misadvises his client and causes them to choose trial over a guilty plea, it doesn't matter if the trial is ultimately fair. What matters is that the lawyer's incorrect advice caused the client to choose an option that was harmful to her best interests. Judge Linares ignored this law and denied my 2255 petition. On this issue, he simply adopted the government's response that the trial was ultimately fair so no harm occurred. Judge Linares stated:
Petitioner alleges that her counsel was ineffective because he failed to advise [her]
of the correct interpretation of the law of materiality as it relates to a possible defense
for bank fraud. However, Petitioner cannot show that the result of her trial would have
been different 'but for' this allege[d] deficiency. Thus, the prejudice prong of Strick-
land is not satisfied. Notwithstanding [counsel's] misapplication of the materiality stand-
dard [regarding one set of documents the 2255 claim] still fails because [those] doc-
uments were not the only falsified documents...at trial. Indeed, [there were] more
important documents the government presented...and...there was no way to argue
these were not material. For these reasons, Petitioner fails the Strickland test. Al-
though [counsel's] approach...may have been deficient...the result would not have
been different for Petitioner. This element is dismissed.
Denial of Nov 11, 2011, at pp. 8-9. (Linares also misunderstood the basic "reasonable probability" standard of Strickland. It isn't "but for" the mistake, the result would be different; it's "but for" the mistake, there's a reasonable probability that the result would be different. Strickland v. Washington, 466 US 688, 693 (1986.) Linares also held that defense counsel did not err by failing to raise fair market value loss because it wasn't accepted law.
On December 19, 2011, I filed a Motion to Reconsider the 2255 denial. I presented my facts more cogently in a Supplemental Affidavit, giving great detail as to attorney-client communication, exactly what was said to me and how it caused me to choose trial over pleading guilty. I focused on my lawyer's misadvise on materiality, loss and intent, stating that it doesn't matter if the trial was fair or not; what mattered was that his misadvise caused me to choose an option that was not in my best interests. I also re-raised his failure to litigate loss, showing that the argument he should have made was already well-accepted in the Third Circuit. None of these arguments were new claims.
On March 12, 2012, the Supreme Court issued a decision in Lafler v. Cooper, 566 US ___, 132 S.Ct 1376. There, a defendant also claimed that his lawyer gave wrong legal advice, causing him to chose trial over a guilty plea. The Supreme Court held that the duty to represent a client fairly applies to the plea negotiation process, stating that the fact that a trial may prove fair down the road doesn't fix the problem caused by the lawyer's initial misadvice; the outcome to be worried about is the client's decision, not the trial result. It expressly adopted the Third Circuit's decision in Day, supra. "Far from curing error, the trial causes the injury from the error. Even if the trial is free from constitutional error, the defendant who goes to trial instead of taking a more favorable plea may be prejudiced from either a conviction on more serious counts or the imposition of a more severe sentence." Id., 182 L.Ed. 2d at 409. I immediately brought this case to my judge's attention in a supplemental filing in early April 2012, noting that it was exactly the same point I was raising.
On May 29, 2012, Judge Linares denied my Motion to Reconsider. He said I was not raising any problems in his first denial but instead raising new grounds, making my motion to reconsider akin to a second habeas, which I wasn't authorized to file. Of course, none of that was true. Then he said that, even if he did consider my claims, none of them had merit anyway. He didn't discuss or even acknowledge the Supreme Court's new decision in Lafler.
III. Rule 33 Motion for a New Trial
I also moved on November 4, 2010 for a new trial based on significant new evidence that appeared after my sentencing. I was referring to Lehman Bros.' bankruptcy filing on September 11, 2008, an act which propelled the world economy to the point of collapse. Its bankruptcy was based on years of predatory mortgage lending where Lehman and its agent, Aurora Lending, deliberately solicited and approved ill-qualified Alt-A loans, then commercialized this worthless paper. Scores of congressional and academic reports after the debacle identified these practices as the core factor underlying the 2008 global financial collapse. I presented some of these reports to Judge Linares, to show that Lehman's nationwide fraud practices were the same as what had occurred in my case: the Aurora loan officer solicited and approved false mortgage applications for our Alt-A loans. I thought this should impact guilt or innocence, or at least the scope of the punishment, in my case, for how could a bank be a victim of its own fraudulent practices?
On October 20, 2011, Judge Linares again denied me relief. He made the ludicrous statement that, if only I had dug more deeply, I would have discovered these nationwide Lehman practices and been able to raise them at my trial.
"Despite the fact that the [submitted] articles [setting forth the full scope of Lehman's
global fraud] were not written until after [Davis] was convicted, the substance of them
as it relates to...certain...loans were known by [her] at trial. Indeed, [Davis' counsel]
'attempted to prove' that Aurora...'participated in the fraud' but simply 'did not have
access to the [Lehman] information...until after it collapsed.... [Davis], however had
over 18 months between the initial indictment and the start of the trial to perform [her]
due diligence. Although it is debatable whether reasonable diligence could have unearth-
ed the evidence now presented within the 18 month time-frame, [Davis] was free to ask
the Court for more time if needed.
Rule 33 Denial, Oct 21, 2011, pp 4-5. Therefore, the bankruptcy and scope of practices information did not qualify as "new evidence." Nor, the court stated, were the loans in my case the same type as those in Lehman's bankruptcy - a clearly wrong statement of fact. Linares said my loans were subprime, when in fact all of the loans in my case were Alt-A loans, so-called "liar loans, the same type as most of those involved in the Lehman collapse. See testimony of Lehman representative Carl Peterson, Sept. 10, 2007, Trial Transcript pp. 4.134, 4.48, 5.37. 5/43. 4.48.
I also moved for reconsideration here, too, showing the record evidence that the loans were the same type and pointed out the absurdity of the belief that one defendant in a single case could have uncovered the full scope of Lehman's global practices, a scope which took sophisticated academics and other professionals years to unearth. It was a ridiculous conclusion. Predictably, Judge Linares denied this motion jointly with his denial of my 2255 reconsideration motion.
IV. Appellate Review
In July 2012 I appealed both these denials to the Third Circuit Court of Appeals. As to the 2255, I pointed out the direct contraction between Judge Linares' position on legal misadvice - that it is irrelevant because the trial outcome was ultimately fair - and the Supreme Court's very clear statement in Lafler v. Cooper that whether the trial is fair or not dos not matter because the damage from the legal misadvice is that it causes the defendant to choose trial over plea and put himself at greater risk for a longer sentence. I also showed that whether a loss figure represents fair market value (the issue my lawyer and Linares said was a new test unaccepted in this Circuit) is exactly the test the federal courts (including the Third Circuit) had been using for years to determine actual loss in my circumstances. It was crazy for an experienced defense counsel not to know this law. And counsel had openly admitted he goofed on this point in his direct appeal reply brief. The standard for granting me permission to fully brief is "could reasonable jurists have disagreed" with the lower court's denial, a very low standard. Nonetheless, the Third Circuit denied me permission to fully brief these issues, stating that "no reasonable jurist could have disagreed" with Judge Linares. It was an astounding conclusion, especially given the Supreme Court's decision in Lafler, which so clearly applied to my situation. I then asked the entire bank of Third Circuit judges to look again at this denial; they denied that request, too. In September 2013, I sought Supreme Court review, showing the straightforward conflict between the denials to date and their own recent decision in Lafler. The Supreme court denied me permission to appeal, and my habeas came to an end.
I also sought Third Circuit review of the lower court's denial of my Rule 33 new trial motion, where Judge Linares claimed I could have discovered Lehman's massive fraud myself had I been more diligent. Unbelievably, the entire Third Circuit bench found no error here, either. They rejected the idea that a financial institution riddled with fraudulent management practices could not itself be a victim of those same practices. I raised this last issue before the Supreme Court, and they rejected it, too. Thus my criminal conviction became final.