Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dance v. United States

United States District Court, W.D. Washington, Seattle

August 15, 2017

DAVID RICHARD DANCE, Petitioner,
v.
UNITED STATES OF AMERICA, Respondent.

          ORDER DENYING PETITIONER'S MOTION UNDER 28 U.S.C. § 2255 TO VACATE, SET ASIDE, OR CORRECT SENTENCE BY A PERSON IN FEDERAL CUSTODY

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court is Petitioner's 28 U.S.C. § 2255 Motion to Vacate, Set Aside, or Correct Sentence. Dkt. # 1. Petitioner David Richard Dance challenges the 48-month sentence imposed on him by this Court after he pleaded guilty to one count of Wire Fraud in violation of 18 U.S.C. § 1343. USA v. Dance, CR15-0349RSM at Dkts. #6, #10 and #17. Petitioner now challenges his sentence on the basis of ineffective assistance of counsel. Dkt. #1 at 2-12. The Government opposes the motion, arguing that Petitioner has failed to prove an ineffective assistance of counsel claim. Dkt. #9. The Court has determined that no evidentiary hearing is necessary. See 28 U.S.C. § 2255(b). After full consideration of the record, and for the reasons set forth below, the Court DENIES Petitioner's § 2255 motion.

         II. BACKGROUND

         On November 2, 2015, Petitioner entered into a plea agreement wherein he agreed to plead guilty to one count of Wire Fraud in violation of 18 U.S.C. § 1343. CR15-0349RSM at Dkt. #6. The agreement set forth the following elements of his crime: 1) that defendant devised a scheme to defraud or to obtain money or property by means of false or fraudulent pretenses, representations or promises; 2) that the statements made or facts omitted as part of the scheme were material; 3) that defendant acted with the intent to defraud, that is, the intent to deceive or cheat; and 4) that the defendant used, or caused to be used, an interstate wire communication to ca rry out or attempt to carry out an essential part of the scheme. Id. at 2. As part of t he agreement, Petitioner agreed that he was guilty of the charged offense, and agreed to the following facts:

From March 2005 through January of 2012, Defendant was the sole managing member and president of 1031 ECI LLC, doing business as 1031 Exchange Coordinators (hereafter “1031 ECI”) in Bellevue, Washington. Through 1031 ECI, Defendant engaged in the business of facilitating exchanges of like-kind property under the Internal Revenue Code of the United States. (With a 1031 exchange, a tax payer can postpone paying taxes on the sale of certain investment properties so long as the sale proceeds are properly reinvested into like-kind real property as part of a qualifying exchange. To ensure that all provisions of the Code are followed, tax payers can utilize an exchange facilitator serving as an intermediary who receives the proceeds from the initial sale then facilitates the subsequent closing.)
When hired to serve as an exchange facilitator, Defendant, through 1031 ECI, would enter into written agreements (collectively hereinafter “Facilitator Agreement”) with clients who were selling and purchasing real estate as part of a 1031 exchange. Defendant signed Facilitator Agreements in his capacity as President of 1031 ECI. The Facilitator Agreement provided that “[f]unds from closing shall be wired into 1031 Exchange Coordinators [sic] trust account with Bancorp Bank, ” “[f]unds from closing shall be wired into the trust account specified by 1031 Exchange Coordinators where it will be pooled with other exchange funds under $500, 000 unless requested otherwise, ” or:
Our policies on exchange funds and earnings follow certain state laws and financial institution regulatory requirements. As a result 1031 Exchange Coordinators has determined to: (I) establish separately identified accounts for exchange funds of $500, 000 or more, with the exchanger receiving the interest, if any, from such account; (II) to offer exchanger the option to have exchange funds in the amounts less than $500, 000 placed in a pooled account potentially yielding higher interest for exchanger. Please initial your selection of one of the choices below:

         __ 1. For all accounts: A separately identified account with minimal or no earnings; Or

__ 2. For accounts of $500, 000 or less: A pooled interest-bearing account with potentially greater earnings; Once the exchanger initials one of the above deposit choices, 1031 Exchange Coordinators shall secure such deposit account and notify Exchanger in writing confirming the specific interest that exchanger will receive upon deposit into such account (Interest rates vary over the life of the exchange. The only thing we know at the beginning is the initial interest rate).

         The Facilitator Agreement provided that 1031 ECI would be paid a flat fee (typically $500 or $1, 000) for the first closing and up to the first three hours of consultation as well as $250 for each closing thereafter. The Facilitator Agreement provided that if additional consulting was required, clients would be billed at a rate of $250 per hour for such consulting, and these fees would be deducted from the funds held by 1031 ECI. In exchange, the Facilitator Agreement provided 1031 ECI would use deposited funds to pay these fees and acquire replacement properties identified by the client or, in the event no replacement properties were acquired, 1031 ECI would return the funds. The Facilitator Agreement did not provide that 1031 ECI would do anything else with deposited funds.

The Facilitator Agreement created the impression that funds deposited by 1031 ECI clients would be secure and available to close exchanges or for repayment in the event no exchanges were completed. Clients who deposited funds with 1031 ECI understood the Facilitator Agreements to obligate 1031 ECI and Defendant to hold their funds during the period between the sale of a relinquished property and the purchase of a replacement property, and ultimately to return funds if no exchange was completed.

         In actuality, Defendant did not maintain all the funds deposited by 1031 ECI's clients in trust and he did not intend to do so when he executed the Facilitator Agreements. Rather, Defendant used some of these funds to make investments and transferred some of these funds to non-client non-trust accounts. Defendant did not provide 1031 ECI's clients with written notification of how their funds were invested despite a requirement under state law obligating him to do so of which Defendant was aware.

Included in these investments and transfers, from February through May of 2011, Defendant wired $1, 319, 000 in funds from 1031 ECI's Bancorp trust account to Brett Amendola. Amendola represented to Defendant that he was developing a golf course and needed what he called “show money” to finalize the project. On behalf of 1031 ECI, Defendant executed a written agreement titled “Irrevocable Trust Agreement” whereby 1031 ECI would transfer funds to an account where it would remain and serve as Amendola's ‘show money' for a few weeks. Amendola represented the account was an escrow account, only Defendant could withdraw funds therefrom, and Defendant could retrieve the funds at any time. In fact, the account provided by Amendola in his wiring instructions was not an escrow account. Instead, Amendola provided a similarly named account and he thereby stole the funds deposited by 1031 ECI. Brett Amendola pled guilty to committing this wire fraud in the Eastern District of Virginia and was sentenced to 84 months in prison.

         During his dealings with Amendola and after Amendola failed to return the funds Defendant wired to him, Defendant continued to take on new 1031 ECI clients. Using the Facilitator Agreements, Defendant caused clients L.A., O.S., H. and M.A., F.C., J.H., E.K., W.L., L. and L.S., G. and G.V., and Y.V. to deposit funds totaling in excess of $7, 000, 000 in 2011. All these funds were initially placed in the same 1031 ECI Bancorp trust account despite a requirement under state law that client funds over $500, 000 shall be deposited in separately identified accounts of which Defendant was aware.

During 2011, Defendant became aware of Amendola's fraud. Defendant did not immediately communicate this material fact to all of the then-existing 1031 ECI clients or to subsequent 1031 ECI clients. Given the transfers to Amendola and other investments by 1031 ECI, the balance of funds in 1031 ECI's Bancorp trust account in 2011 was insufficient to fund all 1031 ECI's client's exchanges or repay all 1031 ECI's clients' deposited funds in the event no exchanges were completed. Defendant was aware of this material fact but chose not to disclose it to 1031 ECI clients. Based on this material omission and the representations in the Facilitator Agreements, clients continued to entrust additional funds to Defendant and 1031 ECI throughout 2011. During this time, Defendant intentionally used funds deposited by 1031 ECI clients including L.A., O.S., H. and M.A., F.C., J.H., E.K., W.L., L. and L.S., G. and G.V., and Y.V. to close other clients' exchanges and to repay money to clients who did not finish completing their exchanges as required by the Internal Revenue Code.

         For example, by October 6, 2011, 1031 ECI's Bancorp trust account balance was $0, despite the fact that 1031 ECI still then had numerous clients with pending or anticipated exchanges proceeding. On October 17, 2011, Defendant executed a 1031 ECI Facilitator Agreement with F.C. providing his “[f]unds from closing shall be wired into the trust account specified by 1031 Exchange Coordinators where it will be pooled with other exchange funds.” Defendant did not disclose material facts to F .C. concerning the funds transferred to Amendola, the balance in the 1031 ECI Bancorp trust account, or the 1031 ECI clients with pending or anticipated exchanges then pending. Based on these material omissions and the representations in the Facilitator Agreement, F.C. conducted an interstate wire transfer of $320, 514.40 belonging to F.C. from North Cascades Bank located in Washington, to the 1031 ECI Bancorp trust account in Delaware. Defendant intentionally used these funds to close other 1031 ECI clients' exchanges and make repayments in cases where exchanges were not completed. By December 6, 2011, 1031 ECI's Bancorp trust account balance was $8.63 and F.C. had not yet completed his exchange or received any repayment. When F.C. requested return of the funds he had deposited with 1031 ECI, Defendant told him the funds had been lost.

As a result of this scheme to obtain money by means of material false or fraudulent pretenses, representations, and promises, Defendant fraudulently obtained approximately $3, 200, 000 in funds deposited by 1031 ECI clients including L.A., O.S., H. and M.A., F.C., J.H., E.K., W.L., L. and L.S., G. and G.V., and Y.V.

Dkt. #6 at 4-7.

         In addition, the parties agreed that the following Sentencing Guidelines provisions apply to this case:

a. A base offense level of seven (7) pursuant to USSG § 2B 1.1 (a)(1).
b. A sixteen (16) level enhancement pursuant to USSG § 2B 1.1 (b)(1) for a loss amount exceeding $1, 500, 000.
c. A two (2) level enhancement pursuant to USSG § 2B 1.1 (b)(2)(a)(i) for involving more than ten victims.

Id. at 8.

         Petitioner also agreed to pay restitution to the individuals harmed by his criminal conduct, which the government estimated to be approximately $3.2 million at the time. Id. at 9.

         On February 4, 2016, this Court held Petitioner's sentencing hearing. Dkt. #16. Petitioner was represented by his attorney, Cassandra Stamm, at that hearing. Dkts. #16 and #25. Ms. Stamm argued at the sentencing that Petitioner had not benefitted from the fraud, and that the monies actually went to clients and business-related expenses. Dkt. #25 at 8:1-18. She further argued that any cover up of the fraud was perpetuated by Mr. Amendola, not by Petitioner. Dkt. #25 at 8:19-9:2. In addition, Ms. Stamm distinguished Petitioner's actions from those made by people running traditional Ponzi schemes, noting that Petition was working with attorneys during the time period of Mr. Amendola's fraud, and they all believed the money would be coming back and everything would be fixed. Id. at 9:24-10:7. After listening to four of the victims speak, as well as Petitioner, the Court ultimately imposed a sentence of 48-months of custody. Id. at 42:14-17. Because the parties were not prepared with a final restitution amount at that time, a restitution hearing was set for a later date. Id. at 6:11-7:8 and 42:19-43:7.

         On September 22, 206, this Court held Petitioner's restitution hearing. Dkt. #44. Petitioner was represented by his new attorney, Jesse Cantor, at that hearing. Id. The Court set a restitution amount of $2, 767, 150.91. Id.

         On February 2, 2017, Petitioner filed the instant motion arguing that his sentence should be reduced due to ineffective assistance of counsel. The motion is now ripe for review.

         III. DISCUSSION

         A. Standard On Motion Under 28 U.S.C. § 2255

         A 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. Petitioner challenges his sentence on the grounds that he received ineffective assistance of counsel during his trial. The Court finds that Petitioner is not entitled to an evidentiary hearing in this matter because the Petition, files, and totality of the record conclusively demonstrate that Mr. Dance is not entitled to relief. See United States v. Howard, 381 F.3d 873, 877 (9th Cir. 2004).

         B. Standard of Review for Ineffective Assistance Claims

         Petitioner argues that his counsel was deficient in three phases of his case: 1) investigating the case prior to the Plea Agreement; 2) responding to the government's sentencing memorandum; and 3) at sentencing. Dkt. #1-1 at 6. Specifically, he ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.