United States District Court, W.D. Washington, Seattle
ORDER DENYING PETITIONER'S MOTION UNDER 28 U.S.C.
RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE
the Court is Petitioner's 28 U.S.C. § 2255 Motion to
Vacate, Set Aside, or Correct Sentence. Dkt. #1. Petitioner
Mark F. Spangler challenges the 192-month sentence imposed on
him by this Court following his jury-trial conviction for
twenty-four counts of wire fraud, seven counts of money
laundering, and one count of investment advisor fraud.
Id. at 1; Case No. 2:12-CR-00133-RSM, Dkt. #165.
Petitioner challenges his sentence on twenty-two grounds.
Dkt. #1. The Government responds that Mr. Spangler's
Motion should be denied because his claims are procedurally
barred and because they are based on false premises. Dkt. #7.
After full consideration of the record, and for the reasons
set forth below, the Court DENIES Mr. Spangler's §
Mark Spangler was a registered investment advisor with the
Securities and Exchange Commission. ER 227, 418-19, 1862; SER
366 (example of annual registration forms introduced at
trial). He headed an investment firm called the
Spangler Group. ER 227; SER 364. The Spangler Group had
approximately 25 client families. SER 271. Mr. Spangler was
eventually found guilty of operating an investment fraud
scheme where he diverted client money to two startup
companies under his control and used new investments to cash
out or pay dividends to existing clients.
scheme collapsed when several clients began to raise
questions and to ask to redeem their investments. Unable to
cover these redemption requests, Mr. Spangler placed his
business into state-court receivership in June 2011 and asked
Kent Johnson to serve as the court-appointed receiver. ER
354, 477, 495; see In re Receivership of the Spangler
Group, Inc. (King County Case No. 11-2-22214-4 SEA).
Under the court's supervision, Johnson managed claims
submitted by Mr. Spangler's clients and by Mr. Spangler
himself. Johnson was able to recover close to 30 million
dollars, or approximately half of what the clients had
invested with Spangler. ER 486-87.
cross-examination, Johnson explained that he had met with
defense counsel to discuss the distribution of funds to the
investors. ER 494. Defense counsel admitted into evidence
through Johnson a copy of a spreadsheet that showed the
differences between three different distribution
methodologies that he referred to as “pooled cash,
” “specific capital, ” and “specific
cash.” See Def. Trial Exh. A-6; ER 508-509.
Johnson explained that the U.S. Attorney's Office
disagreed with the use of the “specific cash”
distribution methodology. ER 511. He testified that the
receivership came up with the “pooled cash”
methodology as the methodology that would “be the most
fair for most of the investors . . . and at the same time
create the least objection…” ER 512. Johnson
described presentations given to the investors on the
proposed distributions at the courthouse and at the Seattle
Public Library. ER 512. Johnson explained that government
lawyers attended the presentation given at the courthouse. ER
513. On redirect examination, Johnson explained that the
state court approved Johnson's recommendation that the
“pooled cash” methodology be used to distribute
assets to the investors. ER 518.
November 7, 2013, after a jury trial, Petitioner was
convicted of twenty four counts of wire fraud, seven counts
of money laundering, and one count of investment advisor
fraud. Case No. 2:12-CR-00133-RSM, Dkt. #143. On March 13,
2014, Petitioner was sentenced to 192 months in prison. Case
No. 2:12-CR-00133-RSM, Dkt. #165. Petitioner filed his
current § 2255 Motion on December 16, 2016. Dkt. #1.
Petitioner's Motion alleges 22 grounds for relief,
including, e.g., “[t]he prosecutor's
failure to reveal a scheme to get State Court approval of a
‘pooling' distribution plan prior to trial….
Put simply, this scheme had Petitioner's guilt
definitively decided by a State Court Motion months before
his actual trial began, and no one questioned its
veracity.” Dkt. #1 at 4. All 22 grounds relate to this
alleged scheme related to the pooling distribution plan
established in the state court receivership proceeding.
motion under 28 U.S.C. § 2255 permits a federal prisoner
in custody to collaterally challenge his sentence on the
grounds that it was imposed in violation of the Constitution
or laws of the United States, or that the Court lacked
jurisdiction to impose the sentence or that the sentence
exceeded the maximum authorized by law. A petitioner seeking
relief under § 2255 must file his motion with the
one-year statute of limitations set forth in § 2255(f).
Procedural Bar to Mr. Spangler's § 2255
may not be raised in a Section 2255 motion if the defendant
had a full opportunity to be heard on the claim during the
trial phase and on direct appeal. See Massaro v. United
States, 123 S.Ct. 1690, 1693 (2003). Where a defendant
fails to raise an issue before the trial court, or presents
the claim but then abandons it, and fails to include it on
direct appeal, the issue is deemed “defaulted”
and may not be raised under Section 2255 except under unusual
circumstances. Bousley v. United States, 523 U.S.
614, 622 (1998); see also United States v. Braswell,
501 F.3d 1147, 1149 & n.1 (9th Cir. 2007). Unless the
petitioner can overcome this procedural default, the Court
cannot reach the merits of his claims. See Bousley,
523 U.S. at 622. To do so, the petitioner must “show
both (1) ‘cause' excusing his double procedural
default, and (2) ‘actual prejudice' resulting from
the errors of which he complains.” United States v.
Frady, 456 U.S. 152, 168 (1982). To demonstrate
“cause” for procedural default, a defendant
generally must show that “some objective factor
external to the defense” impeded his adherence to a
procedural rule. Murray, 477 U.S. at 488. See
also United States v. Skurdal, 341 F.3d 921, 925 (9th
Cir. 2003). The Supreme Court has held that
“cause” for failure to raise an issue exists
“where a constitutional claim is so novel that its
legal basis is not reasonably available to counsel.”
Reed v. Ross, 468 U.S. 1, 16 (1984). The
“prejudice” prong of the test requires
demonstrating “not merely that the errors at . . .
trial created a possibility of prejudice, but that they
worked to his actual and substantial disadvantage, infecting
his entire trial with error of constitutional
dimensions.” Frady, 456 at 170.
to the Government, Mr. Spangler concedes that all 22 grounds
raised in his motion were not raised in direct appeal,
see Dkt. #1 at 5-38 (responses to Question (b)(1)),
but fails to adequately explain why these claims are not
barred procedurally. The form used by Mr. Spangler for his
Motion prompts the filer to supply this information. For
Grounds 1-14 and 16-20, Mr. Spangler's Motion states only
“Prosecutor's failure to reveal and correct (BRADY,
NAPUE) Cause and prejudice for every grounds [sic] except 15,
21, and 22.” See, e.g., Dkt. #1 at 5. For
Grounds 15 and 21, Mr. Spangler states only “[n]ot
material until prosecutor's scheme uncovered.”
Id. at 26 and 35. For Ground 22, Mr. Spangler states
nothing. The Government argues that this is insufficient to
establish “cause” because there was no
“hidden government scheme to coerce the state-court
receiver to use a pooled-cash methodology” and because
“information regarding the receiver's proposed
distribution methodology was available at trial.” Dkt.
#7 at 24 n.3. Mr. Spangler has also failed to establish
“prejudice, ” ...