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United States v. Polishan

February 5, 2007


The opinion of the court was delivered by: Judge Vanaskie


Before the Court is Defendant Paul F. Polishan's Motion to Vacate, Set Aside, or Correct Sentence and Order a New Trial pursuant to 28 U.S.C. § 2255. (Dkt. Entry 334-1.)*fn1 Mr. Polishan advances two arguments in his § 2255 Motion: (1) his sentence was imposed in violation of his Fifth and Sixth Amendment rights, as recognized by the Supreme Court in Apprendi v. New Jersey, 530 U.S. 466 (2000); Blakely v. Washington, 542 U.S. 296 (2004); and United States v. Booker, 543 U.S. 220 (2005); and (2) he was denied his Sixth Amendment right to effective assistance of counsel because trial counsel allegedly failed to conduct adequate pretrial discovery. Because Mr. Polishan is not entitled to relief on either ground, the § 2255 Motion will be denied.


On October 29, 1996, a Grand Jury convened in this District returned an indictment against Mr. Polishan in connection with the falsification of accounting entries in the books and records of the Leslie Fay Companies, Inc. ("Leslie Fay"), a publicly-traded corporation. (Dkt. Entry 1.) The accounting fraud -- which occurred while Mr. Polishan was Leslie Fay's Senior Vice-President of Finance, Chief Financial Officer, and Chief Accounting Officer -- resulted in the substantial over-statement of Leslie Fay's net income for the years 1990, 1991, and 1992. Mr. Polishan was charged with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; seven (7) counts of making material false statements and representations to the United States Securities and Exchange Commission in connection with required securities filings, in violation of 18 U.S.C. § 1001 (Counts II through VIII); one count of fraud in connection with the purchase and sale of securities, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and Rule 10b-5 (Count IX); one count of bank fraud, in contravention of 18 U.S.C. § 1344 (Count X); and ten (10) counts of wire fraud, in violation of 18 U.S.C. § 1343 (Counts XI through XX). Mr. Polishan pled not guilty to all charges.

On November 25, 1996, United States Magistrate Judge Thomas M. Blewitt was designated to serve as special master to preside over the anticipated lengthy discovery process. (November 25, 1996, Order of Court, Dkt. Entry 10.) Magistrate Judge Blewitt initially set May 11, 1998, as the deadline for the completion of pretrial discovery, but later extended the deadline to December 15, 1998.

Because of the voluminous documents and records constituting the Government's case, the Government adopted an "open file" policy and made available to the defense all materials other than privileged items. Over the course of the two-year discovery period, the defense had access to approximately 650,000 to 1.2 million pages of documents for inspection and copying. The defense copied approximately twenty banker boxes of the materials produced by the Government. Additionally, the defense had access to: (1) the 369-page Audit Committee Report issued by Leslie Fay's Audit Committee following an internal investigation that preceded the indictment; (2) materials generated by the SEC investigation; and (3) materials generated by the securities fraud class action litigation in which Mr. Polishan was a defendant.

On January 5, 1999, Mr. Polishan filed an "Omnibus Pretrial Motion," (Dkt. Entry 58), in which Mr. Polishan requested the establishment of a document depository, to which Mr. Polishan and the Government would have access while trial preparations proceeded, and a directive that the Government identify and produce specific documents favorable to Mr. Polishan and material to his guilt or innocence, as required by Brady v. Maryland, 373 U.S. 83 (1963).

Magistrate Judge Blewitt heard oral argument on the discovery-related issues on March 9, 1999, and entered an Order on March 11, 1999, disposing of these issues. (See Dkt. Entry 67.) First, Magistrate Judge Blewitt denied the request for a document depository, although he allowed the defense "to make individual requests for specific documents as the need for same becomes known." (Id. at 2.) Second, Magistrate Judge Blewitt denied Mr. Polishan's request for the Government to identify and produce specific Brady material, reasoning that the Government's provision of an open file for more than two years satisfied its Brady obligations. Mr. Polishan did not appeal Magistrate Judge Blewitt's ruling to the Court.

On March 15, 1999, the Court disposed of the remaining issues in Mr. Polishan's Omnibus Pretrial Motion, including granting his unopposed motion for a non-jury trial. (Dkt. Entry 68.) The Court scheduled the commencement of trial for September of 1999. The trial was subsequently continued, at Mr. Polishan's behest, to March 1, 2000, to provide additional time for trial preparation, including the generation of a report by Mr. Polishan's accounting experts.

The non-jury trial lasted thirty-five (35) days and extended over a period of almost four months. On July 5, 2000, the Court returned its verdict, finding that the Government had proven guilt beyond a reasonable doubt on 18 of the 20 charges against Mr. Polishan (Counts I through XII and XV through XX). (See Verdict of Court, Dkt. Entry 180.)*fn2

On August 14, 2000, Mr. Polishan moved for a new trial. (Dkt. Entry 198.) On September 13, 2000, Mr. Polishan superceded the Motion for a New Trial with an "Omnibus Post-Verdict Motion," which sought an acquittal or a new trial. (Dkt. Entry 207.) Among other reasons, Mr. Polishan claimed an entitlement to a new trial on the ground that Magistrate Judge Blewitt erred in his rulings concerning the discovery-related issues presented in the Omnibus Pretrial Motion.

By Memorandum and Order of July 27, 2001, the Court denied Mr. Polishan's Omnibus Post-Verdict Motion. See United States v. Polishan (Polishan I), No. 3:CR-96-274, 2001 WL 848583 (M.D. Pa. July 27, 2001). Regarding the discovery issues, the Court concluded that Mr. Polishan waived further review of Magistrate Judge Blewitt's rulings by failing to appeal the March 11, 2000, Order. Id. at *11-12 (citing M.D. PA. R. 72.2). The Court also determined that, even if judicial review of the rulings were available, a new trial was not warranted. First, the Court found that Magistrate Judge Blewitt had not abused his discretion in denying Mr. Polishan's request for a document depository, given that Mr. Polishan was afforded over two years to review the documents possessed by the Government and had access to transcripts and documents generated in the SEC investigation and securities fraud class action litigation. Id. And second, the Court rejected Mr. Polishan's assertion that it was error to deny his request that the Government specifically identify documents that could constitute Brady material, finding that the open file policy satisfied the Government's obligation under the circumstances of this case. Id. at *14.

Following the Court's denial of Mr. Polishan's Omnibus Post-Verdict Motion, Mr. Polishan's sentence was determined. A Presentence Investigation Report was prepared utilizing the 1992 edition of the Guidelines Manual. (Presentence Investigation Report ("PSR"), ¶ 47.) The offenses for which Mr. Polishan was convicted -- Counts I through XII and XV through XX -- were grouped together in computing the applicable guideline range. (Id. ¶ 49.) Mr. Polishan was assigned a base offense level of 6 under U.S.S.G. § 2F1.1(a). (Id. ¶ 50.) Eighteen levels were added pursuant to U.S.S.G. § 2F1.1(b)(1)(S) because the aggregate loss of the accounting fraud exceeded $80,000,000. (Id. ¶ 51.) Two levels were added pursuant to U.S.S.G. § 2F1.1(b)(2) because the "offenses involved more than minimal planning and/or scheme to defraud more than one victim." (Id. ¶ 52.) Four levels were added pursuant to U.S.S.G. § 3B1.1(a) because of Mr. Polishan's leadership role in the accounting fraud; two levels were added pursuant to U.S.S.G. § 3B1.3 because of Mr. Polishan's abuse of a position of private trust; and an additional two levels were added pursuant to U.S.S.G. § 3C1.1 because Mr. Polishan obstructed justice by presenting perjured testimony during the trial. (Id. ¶¶ 46, 54-56.) Thus, the Presentence Investigation Report determined Mr. Polishan's net offense level to be 34. (Id. ¶ 61.) Mr. Polishan had no criminal history points, placing him in criminal history category I. (Id. ¶ 64.) With a total offense level of 34 and a criminal history category of I, Mr. Polishan's guideline imprisonment range was 151 to 188 months.*fn3 (Id. ¶ 83.)

Mr. Polishan objected to three of the sentencing enhancements of the Presentence Investigation Report: the aggregate loss from the accounting fraud, the abuse of a position of private trust, and the obstruction of justice (i.e., perjured testimony) enhancements. Mr. Polishan also raised an Apprendi objection to the upward adjustments.

The Court in Apprendi held that facts increasing the penalty for a crime beyond the statutory maximum must be presented to a jury and proved beyond a reasonable doubt. Apprendi, 530 U.S. at 490. Because the facts supporting the upward adjustments were not presented to a jury, Mr. Polishan contended that the statutory maximum was the properly calculated guideline range without the adjustments.

The Court rejected the Apprendi challenge as well as the objection to the obstruction of justice enhancement. The Court, however, permitted Mr. Polishan to present expert accounting testimony on the aggregate loss resulting from the accounting fraud. Based upon testimony from the defense perspective that the loss was approximately $17,000,000, the Court reduced the offense level by 3, resulting in a guideline imprisonment range of 108 to 135 months.*fn4 On January 23, 2002, the Court imposed a term of imprisonment of 108 months. (Dkt. Entry 275.)

Mr. Polishan timely appealed the final judgment. He raised three issues on appeal, including the discovery-related issues, but did not pursue the Apprendi challenge to his sentence. On July 14, 2003, the Third Circuit affirmed Mr. Polishan's conviction. United States v. Polishan (Polishan II), 336 F.3d 234 (3d Cir. 2003). Among other things, the Third Circuit agreed that Mr. Polishan had waived judicial review of the discovery-related issues by failing to appeal the Magistrate Judge's ruling to this Court. See id. at 240-41. Mr. Polishan thereafter filed a petition for writ of certiorari with the Supreme Court, which was denied on March 1, 2004. See Polishan v. United States, 540 U.S. 1220 (2004). Mr. Polishan's conviction thus became final for purposes of 28 U.S.C. § 2255 on March 1, 2004.

On February 28, 2005, Mr. Polishan timely filed the instant § 2255 Motion. Mr. Polishan challenges his sentence on two bases. First, he argues his sentence is unconstitutional and exceeds the statutory maximum, in violation of Apprendi, Blakely, and Booker, because the guideline imprisonment range was adjusted upwards based upon facts neither charged in the indictment nor proven beyond a reasonable doubt to a jury. Mr. Polishan justifies his failure to assert the Apprendi component of his challenge on direct appeal on two bases: (1) ineffective assistance of appellate counsel in neglecting to raise the issue; and (2) futility, i.e., a "solid wall of contrary precedent constituted justifiable cause for not raising it on appeal." (§ 2255 Motion, Dkt. Entry 334-1, at 7.) Second, Mr. Polishan argues that the ...

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