United States District Court, W.D. Washington, Seattle
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
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.
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
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
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
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.
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.
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
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.
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.
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.
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.
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.
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.
Standard On Motion Under 28 U.S.C. § 2255
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).
Standard of Review for Ineffective Assistance Claims
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