IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA EASTERN DIVISION ) ) ) ) ) ) ) ) ) INTRODUCTION

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1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA EASTERN DIVISION SHOLOM RUBASHKIN, Petitioner, vs. UNITED STATES OF AMERICA, Respondent. No. C LRR No. CR LRR PETITIONER S MEMORANDUM IN SUPPORT OF MOTION FOR LEAVE TO AMEND 2255 MOTION INTRODUCTION Petitioner seeks to amend the third ground of his 2255 Motion to clarify and amplify the claims in the original motion. The claims of amended Ground Three arise out of the same transactions and occurrences as the original Ground Three. The Amended 2255 Motion therefore relates back to the original Motion in all respects, and leave to amend should be granted. 1 STATEMENT OF FACTS On September 30, 2013, Petitioner filed a motion under 28 U.S.C asserting three separate grounds for relief. Only Ground Three is at issue in this Motion for Leave to Amend. Ground Three of the original 2255 Motion asserted Brady violations by the government, and specifically, that there exists credible evidence that the government engaged in Brady violations by failing to provide potentially exculpatory information to Mr. Rubashkin s counsel. 1 On November 22, 2013, the government filed a motion to dismiss the original Ground Three of alleged lack of sufficient detail. See Docket No. 5. On January 30, 2014, Petitioner filed his resistance to the government s motion. See Docket No. 16. While the government s motion to dismiss Ground Three should be denied for the reasons set forth in Petitioner s resistance, the present motion, if granted, would render the government s motion moot. - 1 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 1 of 9

2 Attachment to 2255 Petition at 8. Ground Three further states that the exculpatory information not produced in violation of Brady is from witnesses who informed the government that Mr. Rubashkin did not intend to defraud the bank by transferring the money among accounts. Rather, the purpose was ordinary-course, commercial cash management. Attachment to 2255 Petition at 8. Continuing, it states: Defense counsel s investigation, including discussions with Mr. Rubashkin s trial counsel, reveals that the USAO did not provide this information to Mr. Rubashkin s counsel. Id. Further, in explaining why the claim was not raised on direct appeal, the 2255 Motion states: This claim of due process violations under Brady v. Maryland, 373 U.S. 83 (1963 and Alcorta v. Texas, 355 U.S. 28 (1957 was not raised on direct appeal because Mr. Rubashkin was not aware of all the facts supporting this claim, nor could he have, through the exercise of reasonable diligence at the time, discovered such facts. Id. at 9. Petitioner s proposed amendment will amplify and clarify Ground Three by including information and an affidavit from a crucial government witness at trial, Mitchel Meltzer, regarding exculpatory information Meltzer provided to the government. Meltzer told the government that Petitioner was always in a very tight cash position as a result of capital expansions of the Agriprocessors plant and the company s financial support for Jewish entities. Meltzer said that Petitioner addressed these cash flow problems, in part, by playing the float that occurs between the time a check is written on an account and the time the funds are actually drawn from that account. Meltzer said the time for processing checks was shortened in the early 2000s, and as a result Petitioner tried to recreate the lost float by transferring funds among additional accounts. Meltzer further informed the government that First Bank never reviewed actual customer checks as part of its audit of Agriprocessors, and thus would not have known - 2 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 2 of 9

3 whether any particular check deposited into the Decorah Bank & Trust account had come from an Agriprocessors account, a customer account, or some other account. ARGUMENT I. THE COURT SHOULD GRANT LEAVE TO PERMIT MR. RUBASHKIN TO AMEND GROUND THREE OF HIS 2255 PETITION BECAUSE THE PROPOSED AMENDMENT CLARIFIES AND AMPLIFIES THE UNDISCLOSED, EXCULPATORY INFORMATION REGARDING MR. RUBASHKIN S LACK OF CRIMINAL INTENT IN THE MONETARY TRANSACTIONS ALLEGED AS MONEY LAUNDERING. A. Leave to Amend Is Appropriate Under Fed. R. Civ. P. 15. Post-conviction motions for relief must be filed within one year from the date the judgment becomes final. 28 U.S.C When a motion for post-conviction relief under 28 U.S.C is timely filed, Rule 15 of the Federal Rules of Civil Procedure applies to any subsequent attempt to amend the motion. See United States v. Harrison, 469 F.3d 1216, 1217 (8th Cir Rule 15(a(2 states that [t]he court should freely give leave to amend when justice so requires. New claims and issues may be alleged in the amended 2255 motion if they relate back to the original, timely-filed motion. See United States v. Hernandez, 436 F.3d 851, 857 (8th Cir (concluding that Rule 15(c s relation back rules apply to 2255 motions, cert. denied, 547 U.S (2006. An amended 2255 motion relates back to the original motion when it asserts a claim that arose out of the same conduct, transaction, or occurrence set out... in the original motion. Dodd v. United States, 614 F.3d 512, 515 (8th Cir (quoting, in part, Fed. R. Civ. P. 15(c(1(B; see also Mayle v. Felix, 545 U.S. 644, 664 (2005 (applying Rule 15(c to a 2254 petition and noting that to arise out of the same conduct, transaction, or occurrence, the claims must be tied to a common core of operative facts. An amended claim also relates back if it clarifies or amplifies a claim or theory in the original motion. United States v. Espinoza- - 3 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 3 of 9

4 Saenz, 235 F.3d 501, 505 (10th Cir. 2000; accord United States v. Ruiz-Ahumada, CR MWB, 2006 WL (N.D. Iowa Oct. 24, Petitioner seeks leave to provide information from a key government witness Meltzer who informed the government that the movement of funds between (1 the Agriprocessors operating account at Citizens State Bank; (2 the Torah Education ( TE or Kosher Community Grocery ( KCG accounts; and (3 the Agriprocessors account at Decorah Bank & Trust must not have been designed to conceal the source of those funds, but rather must have been done for cash flow management purposes i.e., to play the float. Meltzer explained to the government that Petitioner was always in a tight cash flow situation, and that those cash flow problems grew worse in the early 2000s when banks began processing checks more quickly. Meltzer said that Petitioner must have been trying to regain lost float time by moving funds through third-party accounts like the KCG and TE accounts. Meltzer also informed the government that First Bank never reviewed copies of actual checks as part of the bank s periodic audits of the Agriprocessors account. Accordingly, even assuming fraud was being committed through diversion of customer payments, Petitioner would have had no need to move the diverted funds from the Citizens State Bank account to the KCG or TE accounts before returning them to the Decorah Bank & Trust account. Petitioner simply could have moved the funds directly from the Citizens State Bank account to the Decorah Bank & Trust account, and the bank would have been none the wiser. 2 It follows that Petitioner s movement of funds through the KCG and TE accounts must have been designed to accomplish 2 Indeed, funds often did move directly from the operating account at Citizens State Bank to the sweep account at Decorah Bank & Trust during the same period that funds also sometimes flowed through the KCG and TE accounts. Had Petitioner truly intended to conceal the source of funds derived through fraud, he surely would have had all the funds flow through the KCG and TE accounts. - 4 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 4 of 9

5 something other than concealing the source of those funds. In other words, Meltzer s exculpatory information helps to establish that Petitioner did not intend to engage in money laundering. The exculpatory information provided by Meltzer was material to the jury s verdict on the money laundering charges. No witness testified that Petitioner intended to conceal the source of funds by moving them through the KCG and TE accounts before depositing the funds in the Decorah Bank & Trust account. Rather, the government asked the jury to draw the inference that money laundering was occurring: See, e.g., Closing Argument Transcript at 60-61: [GOVERNMENT COUNSEL]: And then concealment, knowing that the purpose of that financial transaction, the deposits of those CHAX checks into the depository account, CHAX checks from Torah Education, CHAX checks from Kosher Community Grocery, knowing that those transactions are intended to conceal the source of the funds or disguise the source of the funds. What are they disguised like? They re disguised like customer payments, okay. Seemingly random amounts, CHAX checks from a store, from a school. Had Petitioner s counsel been aware that Meltzer provided this exculpatory information to the government, counsel surely would have cross-examined him about it and elicited the helpful statements. Consequently, there is a reasonable probability that no juror would have convicted Mr. Rubashkin of money laundering. See Banks v. Dretke, 540 U.S. 668, 703 (2004. This, in turn, would have resulted in Petitioner facing a Sentencing Guidelines range at least 114 months lower (at the bottom end than the range calculated at sentencing. Compare Court Sentencing Memorandum finding bank fraud calculation (Doc at 31 at level 31 corresponding with potential final range of months with money laundering calculation (Doc at 34 at level 35 corresponding with actual final range of months. The Eighth Circuit has granted amendment in similar circumstances. In Dodd v. United States, 614 F.3d at 516, an amendment to a 2255 motion alleged that trial counsel was - 5 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 5 of 9

6 ineffective for failing to object to speculative testimony concerning drug quantities. The Eighth Circuit reversed the district court and held the original petitioner s assertion that trial counsel [f]ailed to cross examine more than half of Government Witnesses and object to the alleged drug amounts that they testified to referred to the same operative facts of a ground raised in the amended motion. Id. In the amendment, the petitioner alleged counsel failed to object to evidence offered by specific witnesses on the basis that their testimony as to drug quantity was too speculative, and quoted testimony from the record. Id. The court found the allegations refer to the same core facts the alleged failure of [the petitioner s] trial counsel to object to drug quantity evidence offered by Government witnesses during their direct testimony. The fact that the amended motion identifies the legal basis of the objectionable nature of the testimony as being too speculative does not change the factual similarity of the two complaints. Both the original and the amended motions identify the Government witnesses drug quantity testimony as evidence counsel should have objected to but did not, allegedly rendering counsel's assistance ineffective. Id. The same conclusion is appropriate here. B. The Amendment Will Clarify and Amplify Claims Arising Out of the Same Conduct, Transaction, or Occurrence as Mr. Rubashkin s Original 2255 Motion. An item-by-item analysis of allegations in the original 2255 Motion and the amended 2255 Motion shows that the amendment merely clarifies and amplifies the claims, and arises out of the same conduct, transaction, and occurrence, that were originally pled. i Original: The original Ground Three alleged that witnesses informed the government of exculpatory information. (Attachment to 2255 Motion at Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 6 of 9

7 Amended: The amended Ground Three clarifies this information by identifying Mitchel Meltzer as one of the witnesses who provided this information. (Meltzer Aff. 3a. 3 ii Original: The original Ground Three alleged that Mr. Rubashkin did not intend to defraud the bank by transferring the money among accounts but [r]ather, the purpose was ordinary-course, commercial cash management. (Attachment to 2255 Motion at 8. Amended: The amended Ground Three clarifies and amplifies the original by alleging that Meltzer told the agents and prosecutors that [Meltzer] did not believe Sholom intended to defraud the bank with these transactions and that the movement of funds was simply a means of managing cash flow. (Meltzer Aff. 3a. Further, Mr. Meltzer specifies that Mr. Rubashkin tried to re-create the lost float by transferring monies to and from other accounts to give himself an extra day or two before certain expenditures would be settled. (Id. Finally, Mr. Meltzer clarifies that he told the government the movement of funds through other accounts could only have been designed to extend the time of the float and help with short-term cash flow management because the bank allegedly defrauded never reviewed checks and thus it was unnecessary to conceal the source of those funds. (Id. 4. iii Original: The original Ground Three alleged that [d]efense counsel s investigation, including discussions with Mr. Rubashkin s trial counsel, reveals that the USAO did not provide this information to Mr. Rubashkin s counsel. (Attachment to 2255 Motion at 8. Amended: The amended Ground Three clarifies and amplifies that Meltzer told the agents and prosecutors that [Meltzer] did not believe Sholom intended to defraud the bank with these transactions and that when he testified at trial, he was surprised that no one asked [him] whether [he] thought Sholom intended to defraud the bank in connection with the various financial transactions and movement of funds, as he would have said no. (Meltzer Aff. 3a, 5. As the item-by-item analysis shows, the allegations of Brady violations in the amended motion are of the same time and type as those in the original motion, and arise from the exact same core set of operative facts. See Dodd, 614 F.3d at 515. Because the amended motion relates back to the original motion in this way, the clarified and amplified allegations in Petitioner s amended motion should be considered on the merits. 3 Petitioner has reason to believe that another witness also may have provided material, exculpatory information to the government that was not disclosed to Petitioner or his counsel. - 7 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 7 of 9

8 C. Justice Requires Granting Leave to Amend In Light of Petitioner s Unexpected Loss of Counsel Immediately Prior to the Filing of His Original 2255 Petition Was Filed. In addition to the reasons set forth above, leave to amend is appropriate because of circumstances outside of Petitioner s control that led to the withdrawal of his lead counsel shortly before the filing of his 2255 Petition. The withdrawal arose out of advice lead counsel provided regarding contact with jurors from Petitioner s criminal case. See generally United States v. Rubashkin, Case No. 2:08-cr-1324-LRR-2 at Docket Nos (Order granting motion to show cause; 1041 (supplement to special appearance of James Wyrsch stating his intention not to represent Petitioner any further. Petitioner and those assisting him sought and followed counsel s advice in good faith. Given the complexity of Petitioner s underlying criminal case and four-week long trial, the withdrawal of lead counsel put him in an incredibly difficult position immediately prior to the deadline for filing his 2255 Petition. Any ambiguity or lack of detail in Ground Three was closely related to this last-minute and unexpected change of circumstances. Petitioner respectfully submits that the interests of justice support granting leave to amend Ground Three to provide additional detail and ensure that important matters relating to the legitimacy of his twenty-seven year sentence are fully adjudicated. CONCLUSION For the reasons set forth, Petitioner respectfully requests that the Court grant his motion for leave to amend and award such other and further relief as the Court deems appropriate. - 8 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 8 of 9

9 BELIN McCORMICK, P.C. By: /s/ Stephen H. Locher Stephen H. Locher Matthew C. McDermott 666 Walnut Street, Suite 2000 Des Moines, IA Telephone: ( ; Facsimile: ( ; Paul H. Rosenberg ROSENBERG & ASSOCIATES 666 Grand Avenue, Suite 1837 Des Moines, IA Telephone: ( Facsimile: ( ATTORNEYS FOR PETITIONER SHOLOM RUBASHKIN PROOF OF SERVICE The undersigned certifies that the foregoing instrument was served upon the parties to this action by serving a copy upon each of the attorneys listed below on March 17, 2014 by U.S. Mail Hand Delivered FedEx/ Overnight Carrier FAX Electronic Mail CM / ECF Peter E. Deegan, Jr. U.S. Attorney s Office 111 Seventh Avenue SE, Box 1 Cedar Rapids, IA Peter.deegan@usdoj.gov; cj.williams@usdoj.gov; matt.cole@usdoj.gov ATTORNEYS FOR DEFENDANT Signature: BELIN\R0591\0001\ /s/ V. Drake - 9 Case 2:13-cv LRR Document 27-1 Filed 03/18/14 Page 9 of 9