The opinion of the court was delivered by: Bartle, J.
Before the court is the motion of Allen W. Stewart ("Stewart")
under 28 U.S.C. § 2255 to vacate, set aside, or correct sentence.
Stewart was convicted by a jury in December, 1997 of 135 counts of
violating the Racketeer Influenced and Corrupt Organizations Act
("RICO"), 18 U.S.C. § 1961, et seq., as well as federal mail
fraud, wire fraud, and money laundering statutes. 18 U.S.C. § 1341,
1343, 1957. The charges arose out of Stewart's involvement
in a complex scheme to loot Summit National Life Insurance Company
("Summit") and Equitable Beneficial Life Insurance Company
("EBL"). The jury also determined that certain of Stewart's assets
were subject to forfeiture under the RICO and money laundering
laws. On August 13, 1998 Stewart was sentenced to 15 years
imprisonment, and an order of restitution in the amount of $60.1
million was entered against him. His conviction and sentence were
subsequently affirmed by the Court of Appeals, United States v.
Stewart, 185 F.3d 112 (3d Cir. 1999), and the Supreme Court
thereafter denied certiorari. Stewart v. United States,
528 U.S. 1063 (1999).
Stewart's timely collateral attack first challenges his
convictions for mail fraud under 18 U.S.C. § 1341*fn1 and wire
fraud under 18 U.S.C. § 1343.*fn2 To support his argument that
these convictions must be vacated, Stewart relies on Cleveland v.
United States, 531 U.S. 12, 121 S.Ct. 365 (2000), decided after
the Supreme Court denied certiorari in this case, and thus after
his conviction became final. Cleveland held that licenses issued
by states are not property within the
meaning of the federal mail
fraud statute.*fn3 Since the mail fraud statute "requires the
object of the fraud to be `property' in the victim's hands," the
Court concluded that the use of fraud to obtain a state license
does not fall within the ambit of § 1341. Id. at 374. Thus, even
though "licensees may have property interests in their licenses,"
using a scheme or artifice to defraud in order to obtain a license
from a state regulator does not constitute a violation of § 1341.
Before turning to the merits of Stewart's Cleveland argument, we
must decide whether his claim is procedurally defaulted.*fn4 While
Stewart raised the issue of licenses not constituting property
under the mail and wire fraud statutes prior to trial and in his
certiorari petition, he did not assert it during his direct
appeal. The Supreme Court most recently addressed procedural
default in Bousley v. United States, 523 U.S. 622 (1998). See also
United States v. Frady, 456 U.S. 152, 167 (1982). Bousley made
clear that the procedural default rule applies to claims arising
under decisions like Cleveland which hold "that a substantive
federal criminal statute does not reach certain conduct." Id. at
620. If such a claim has been procedurally defaulted because it
was not raised on direct review, "the claim may be raised in
habeas only if the defendant can first demonstrate either `cause'
and actual `prejudice,' or that he is `actually innocent.'" Id. at
622 (citations omitted).
"Cause" for failing to raise a claim exists if the claim had "no
reasonable basis in existing law." Reed v. Ross, 468 U.S. 1, 15
(1984). In other words, a defendant may demonstrate "cause" for
his procedural default if an issue was "so novel that its legal
basis [was] not reasonably available to counsel." Id. Stewart's
Cleveland claim is not "so novel" as to constitute cause. See
Bousley, 523 U.S. at 622. At the time of Stewart's trial and
appeal the question whether licenses were property under § 1341
was a hotly contested issue subject to great debate in the lower
courts. Many circuits had already reached the conclusion licenses
were not property for purposes of the mail fraud statute. See
United States v. Shotts, 145 F.3d 1289, 1296 (11th Cir. 1998);
United States v. Schwartz, 924 F.2d 410, 418 (2d Cir. 1991);
United States v. Granberry, 908 F.2d 278, 280 (8th Cir. 1990);
Toulabi v. United States, 875 F.2d 122, 125 (7th Cir. 1989);
United States v. Dadanian, 856 F.2d 1391, 1392 (9th Cir. 1988);
United States v. Murphy, 836 F.2d 248, 254 (6th Cir. 1988).
Several circuits, including our Court of Appeals, had made the
opposite determination. See United States v. Salvatore,
110 F.3d 1131, 1138 (5th Cir. 1997); United States v. Bucuvalas,
970 F.2d 937, 945 (1st Cir. 1992); United States v. Martinez, 905 F.2d 709,
715 (3d Cir. 1990). Clearly then, the basis of the claim was not
novel at the time of Stewart's direct appeal.
Stewart notes that it was because of the binding authority of the
Third Circuit's decision in Martinez that he did not raise the
license issue on direct appeal. In other words, he contends it
would have been futile for him to do so. The Supreme Court has
explicitly stated that this position is unavailing because
"futility cannot constitute cause if it means simply that a claim
was unacceptable to that particular court at that particular
time." Bousley, 523 U.S. at 623 (quoting Engle v. Isaac,
456 U.S. 107, 130 n. 35 (1982)). Since "a § 2255 movant cannot show `cause'
for failing to make . . . [an] argument on direct appeal by
demonstrating that circuit law at the time would have made any
such argument futile," Stewart has no "cause" for his default.
United States v. Ramos, 147 F.3d 281, 287 (3d Cir. 1998).
Stewart also argues that his counsel was ineffective for failing
to raise the Cleveland issue on appeal. "It is now
well-established that a successful claim of ineffective assistance
of counsel under Strickland v. Washington, 466 U.S. 668, . . .
satisfies the `cause' prong of a procedural default inquiry."
United States v. Garth, 188 F.3d 99, 107 (3d Cir. 1999). In order
to establish a claim of ineffective assistance of counsel under
Strickland that rises to the level of constitutional error, a
petitioner must prove: (1) counsel's performance "fell below an
objective standard of reasonableness," that is, that he "made
errors so serious that counsel was not functioning as the
`counsel' guaranteed the defendant by the Sixth Amendment;" and
(2) the deficient representation prejudiced petitioner, that is,
that "counsel's errors were so serious as to deprive the defendant
of a fair trial, a trial whose result is reliable." Id. at 687-88.
It is well settled that when choosing which issues to raise on
appeal, "[a]n exercise of professional judgment is required.
Appealing losing issues `runs the risk of burying good arguments
. . . in a verbal mound made up of strong and weak contentions.'"
Sistrunk v. Vaughn, 96 F.3d 666, 670 (3d Cir. 1996) (quoting
Jones v. Barnes, 463 U.S. 745, 753 (1983)). Only in rare cases
will failure to raise an issue on appeal constitute ineffective
assistance of counsel because the "process of winnowing out weaker
arguments on appeal and focusing on those more likely to prevail,
far from being evidence of incompetence, is the hallmark of
effective appellate advocacy." Smith v. Murray, 477 U.S. 527, 536
(1986) (internal quotations omitted).
Stewart's trial lasted approximately six weeks. Numerous
pre-trial, trial, and post-trial motions were made and ruled on by
this court. There existed a plethora of issues that could have
been appealed. Stewart's counsel chose to pursue 10 issues on
appeal in a lengthy 85 page brief. Viewed in light of Third
Circuit law at the time, the license issue was weak and unlikely
to prevail. See Martinez, 905 F.2d at 715. Thus, the decision not
to pursue it clearly "fell within the `wide range of
professionally competent assistance' required under the Sixth
Amendment to the Federal Constitution." Smith, 477 U.S. at 536
(quoting Strickland, 466 U.S. at 690).
Furthermore, "there is no general duty on the part of defense
counsel to anticipate changes in the law," Government of the
Virgin Islands v. Forte, 865 F.2d 59, 62 (3d Cir. 1989), and
failure to do so does not constitute ineffective assistance of
counsel. See Sistrunk, 96 F.3d at 672; Horne v. Trickey,
895 F.2d 497, 500 (8th Cir. 1990). Keeping in mind that "[a] fair
assessment of attorney performance requires that every effort be
made to eliminate the distorting effects of hindsight," we find
that the failure of Stewart's counsel to anticipate the Supreme
Court's ruling in Cleveland does not amount to ineffective
assistance of counsel and that Stewart has therefore failed to
show "cause" for the procedural default. Strickland, 466 U.S. at
The only way which Stewart's lack of "cause" for his procedural
default can be excused is if he can establish "actual innocence."
Bousley, 523 U.S. at 623. To establish "actual innocence" a
defendant must show that "in light of all the evidence, it is more
likely than not that no reasonable juror would have convicted
him." Id. "Simply stated, `actual innocence' . . . means that the
person did not commit the crime." Garth, 188 F.3d at 107 (internal
quotations omitted). If a defendant can demonstrate "actual
innocence," then the court can consider the merits of the
defaulted claim. Id. at 107-08.
Stewart simply cannot take advantage of this exception, reserved
for a "fundamental miscarriage of justice." Herrara v. Collins,
506 U.S. 390, 404 (1993). There was overwhelming evidence
presented at trial that Stewart devised schemes to defraud people
of money and property other than licenses, including premiums from
policyholders and customers, dividends, and various types of fees.
Furthermore, the jury clearly found that property other than
licenses was obtained through his schemes because it returned
special verdicts requiring Stewart to forfeit specific amounts of
money and pieces of property under the RICO and money laundering
forfeiture laws. Given the above, Stewart clearly cannot meet the
Bousley standard, which requires him to show that "in light of
all the evidence, it is more likely than not that no reasonable
juror would have convicted him." 523 U.S. at 623. He has not
established that he is "actually innocent" of his mail and wire
fraud convictions and has thus procedurally defaulted his
Even if we are incorrect that Stewart has procedurally defaulted
his Cleveland claim, he cannot succeed on the merits. Stewart
argues that he is entitled to relief under Cleveland because the
superseding indictment under which he was charged defined property
under the mail and wire fraud counts to include licenses among
other items. As a result, Stewart maintains his conviction was
flawed since licenses are not property under the mail and wire