IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JOHN ARTHUR BOULTBEE, )

)

Petitioner, )

) Case No. 12 C 4002

v. )

)

UNITED STATES OF AMERICA, )

)

Respondent. ) 

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court Judge:

 Before the Court is pro se Petitioner John Arthur Boultbee’s motion to vacate, set aside,

or correct his sentence pursuant to 28 U.S.C. § 2255. For the following reasons, the Court denies

Petitioner’s Section 2255 motion and declines to certify any issues for appeal pursuant to 28

U.S.C. § 2253(c)(2).

FACTUAL BACKGROUND

I. Charges

On August 17, 2006, a federal grand jury returned a seventeen-count Third Superseding

Indictment against Petitioner and his co-defendants Conrad Black, Peter Atkinson, and Mark

Kipnis, all of whom were senior executives at Hollinger International.1

 On January 10, 2007, the

government filed a Superseding Information removing some of the allegations from the Third

Superseding Indictment. The Superseding Information charged Petitioner and his co-defendants

with committing the following offenses: (1) mail and wire fraud in violation of 18 U.S.C. §§

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 Defendants David Radler and Ravelston Corporation Limited pleaded guilty before the

2007 jury trial. Radler agreed to cooperate with the government and testified at trial.
1341, 1343, including the deprivation of the intangible right to honest services in violation of 18

U.S.C. § 1346; (2) money laundering in violation of 18 U.S.C. § 1957; (3) obstruction of justice

in violation of 18 U.S.C. § 1512(c)(1); (4) racketeering in violation of 18 U.S.C. § 1962(c); and

(5) criminal tax violations in violation of 26 U.S.C. § 7206(2).

II. Jury Trial

On July 13, 2007, after extensive pretrial proceedings, approximately four months of

trial, and two weeks of jury deliberations, a jury convicted Petitioner and his co-defendants on

several counts of the Superseding Information. In particular, the jury convicted Petitioner and

his co-defendants on several mail and wire fraud counts in violation of 18 U.S.C. §§ 1341, 1346, 

involving non-existent covenants not to compete. After the jury convicted Petitioner, the Court

sentenced him to 27 months imprisonment in December 2007. 

Relevant to this Section 2255 motion is Count Seven of the Superseding Information. 

Count Seven charged a scheme to defraud involving $600,000 in non-competition payments

taken out of the reserves from two transactions – the Forum and Paxton transactions – in which

Hollinger International’s newspapers were sold. The Superseding Information specifically 

charged that Petitioner and his co-defendants knowingly caused a mailing in furtherance of the

scheme on or about April 9, 2001, which contained four checks: $285,000 for Black; $285,000

for Radler; $15,000 for Petitioner; and $15,000 for Atkinson. To establish Petitioner guilty of

Count Seven, the government had to prove beyond a reasonable doubt that: (1) Petitioner

knowingly devised or participated in a scheme to defraud or to obtain money or property by

means of materially false pretenses, representations, or promises; (2) Petitioner did so knowingly

and with the intent to defraud; and (3) a mailing in furtherance of the scheme. See 18 U.S.C. §§

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1341, 1343; see also United States v. Howard, 619 F.3d 723, 727 (7th Cir. 2010).

At trial, the government introduced evidence that co-schemer Radler directed $600,000

remaining in the reserves from the Forum and Paxton transactions as supplemental non-compete

payments, including $15,000 to Petitioner. Although Petitioner maintains that these payments

were legitimate bonuses, the trial evidence established beyond a reasonable doubt that he never

received any legitimate bonus payments from any subsidiary of Hollinger International. Also,

Petitioner received his check even though he never executed a non-competition agreement and

the purchasers never requested any such agreements. Further, the government introduced

evidence that Petitioner did not disclose the $15,000 in his proxy questionnaire related to certain

United States Securities and Exchange Commission (“SEC”) disclosures. 

Also relevant to this Section 2255 motion is that the government submitted the fraud

counts to the jury on two theories: (1) conventional pecuniary fraud; and (2) a scheme to deprive

Hollinger International of its “intangible right of honest services” pursuant to 18 U.S.C. § 1346. 

III. Appeals

Petitioner and his co-defendants appealed to the United States Court of Appeals for the

Seventh Circuit bringing the following claims: (1) there was insufficient evidence that they

engaged in conventional pecuniary fraud; (2) the government’s honest services theory was

legally invalid; (3) there was insufficient evidence of fraud and a criminal mailing concerning

certain supplemental payments to support the fraud allegation in Count Seven; (4) the Court

erred in giving the conscious avoidance (“ostrich”) instruction; and (5) the Court should have

given an instruction concerning misrepresentations that occurred after the dates of the charged

scheme. On June 25, 2008, the Seventh Circuit rejected these arguments and affirmed the

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defendants’ convictions. See United States v. Black, 530 F.3d 596 (7th Cir. 2008). 

Thereafter, the United States Supreme Court granted the defendants’ petition for

certiorari and eventually held that the honest services jury instruction was erroneous because –

unless the defendants received a bribe or kickback – 18 U.S.C. § 1346 was unconstitutionally

vague. See Skilling v. United States, 561 U.S. ___, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010);

Black v. United States, 561 U.S. ___, 130 S.Ct. 2963, 177 L.Ed.2d 695 (2010). The Supreme

Court remanded the matter to the Seventh Circuit to determine whether this instructional error

was harmless. The parties then filed their Circuit Rule 54 Statements of Position and Responses

to the Seventh Circuit. Shortly thereafter, the Seventh Circuit held that the instructional error

was harmless as to one of the fraud counts, namely, Count Seven, and remanded the matter for a

new trial on the remaining fraud counts. The Seventh Circuit, however, also advised the

government to consider dismissing the remaining fraud counts. 

In its 2010 opinion on remand, the Seventh Circuit discussed the trial evidence

supporting the pecuniary fraud charge in Count Seven:

[Count Seven] involves payments to the defendants (via Hollinger) of

$600,000 in connection with Hollinger’s sale to two companies, Forum and

Paxton, which to simplify we’ll treat as one, of community newspapers; the

$600,000 was allegedly compensation for the defendants’ promising not to

compete with these newspapers after the sale. The defendants don’t contend that

the money represented management fees owed by Hollinger. The contention

rather is that the money was compensation for bona fide covenants not to

compete. The contention is implausible because these are small newspapers and

the defendants could have no interest in going into competition with them as

individuals – for the covenants bind them, not Hollinger or any other company

that might want to enter the community-newspaper business. The owners of

Forum–Paxton testified that they didn’t request such a covenant. Their testimony

was not only disinterested but was supported by the clowning note that David

Radler, an executive of Hollinger, wrote to the defendants, in which he said that

Forum–Paxton had “asked for a 5-year non-compete from Conrad [Black] and me

covering not only the states wherein they purchased assets but those states that

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border the said states. This would leave us only Alaska, Wyoming and Louisiana

for us to continue our activities.... I have been assured there is [sic] suitable

accommodations four [sic] our new headquarters in Casper, Wyoming.”

What makes the contention that the $600,000 was compensation for

covenants not to compete additionally and decisively unbelievable is that there

are no covenants. The defendants concede that none was prepared, but attribute

the omission to innocent mistake. The concession fatally undermines their

challenge to the convictions on this count. Either the failure to prepare covenants

was an innocent mistake – in which event the defendants could no more be

convicted by a reasonable jury of honest-services fraud than of pecuniary fraud,

because a merely careless withholding of services owed a principal by an agent

was never criminal fraud under the honest-services provision (or any other

provision) of the mail and wire fraud statutes, United States v. Cochran, 109 F.3d

660, 667–68 (10th Cir. 1997); see also United States v. Sorich, 523 F.3d 702,

707–08 (7th Cir. 2008); United States v. Bloom, 149 F.3d 649, 654-55 (7th Cir.

1998) – or no covenants were intended, and the fees were part of the purchase

price of the newspapers, owed to Hollinger and stolen by the defendants. No

reasonable jury could have acquitted the defendants of pecuniary fraud on this

count but convicted them of honest-services fraud.

The defendants argue that maybe the jury believed that the absence of the

covenants was an innocent mistake but convicted them because they failed to

disclose the payments to the board. The failure to disclose is mentioned in

passing in the information, but the evidence at trial, and the closing arguments,

focused on whether the absence of a written covenant was merely an oversight or

instead proof of pecuniary fraud.

The jury acquitted the defendants on two other counts related to covenants

not to compete with Forum-Paxton. But in those instances the fees went to

Hollinger, and it is Hollinger that issued covenants not to compete, not the

defendants, and Hollinger was a far more plausible entrant into Forum-Paxton’s

markets than the defendants, as individuals, were. The only rational explanation

for the split verdict is that the jury believed that the $600,000 that the defendants

received from Forum-Paxton without covenants not to compete, unlike the other

transactions with that company, were proceeds of a plain-vanilla pecuniary fraud

– and only a pecuniary fraud. For had the jury believed that a failure to disclose

the fees for promising not to compete with the little newspapers was honestservices fraud, it would have convicted the defendants on all the fraud counts,

because the defendants disclosed those fees neither to the board nor to the

shareholders; and the jury didn’t do that.

When to this logical point are added the absence of a written record of a

$600,000 transaction, the disinterested testimony by the newspapers’ buyers that

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they did not request covenants not to compete, Radler’s implicit boast that the

covenants were fabrications, and the absence of an economic reason for them

(because the defendants had no conceivable interest in becoming individual

publishers of small community newspapers), the evidence of pecuniary fraud is so

compelling that no reasonable jury could have refused to convict the defendants

of it.

United States v. Black, 625 F.3d 386, 392-93 (7th Cir. 2010).

On remand to this Court, the government elected to dismiss the remaining fraud counts

remanded for retrial, and thus Petitioner stands convicted of one count of pecuniary fraud as

charged in Count Seven. On February 10, 2011, the Court entered an amended Judgment and

Commitment Order. On April 4, 2011, Petitioner filed a notice of appeal. The Seventh Circuit

dismissed the appeal on Petitioner’s own motion on July 6, 2011. By June 2009, Petitioner

completed his prison sentence. Because Petitioner filed the present motion before his supervised

release term ended, the government does not challenge the “in custody” requirement under

Section 2255. See Torzala v. United States, 545 F.3d 517, 521 (7th Cir. 2008).

LEGAL STANDARD

“[R]elief under § 2255 is an extraordinary remedy because it asks the district court

essentially to reopen the criminal process to a person who already has had an opportunity for full

process.” Almonacid v. United States, 476 F.3d 518, 521 (7th Cir. 2007). Under Section 2255,

relief “is available only when the ‘sentence was imposed in violation of the Constitution or laws

of the United States,’ the court lacked jurisdiction, the sentence was greater than the maximum

authorized by law, or it is otherwise subject to collateral attack.” Torzala, 545 F.3d at 521

(quoting 28 U.S.C. § 2255). A Section 2255 motion is not a substitute for a direct criminal

appeal nor is it a means by which a defendant may appeal the same claims a second time. See

Varela v. United States, 481 F.3d 932, 935 (7th Cir. 2007) (Section 2255 motion is “neither a

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recapitulation of nor a substitute for a direct appeal.”) (citation omitted); White v. United States,

371 F.3d 900, 902 (7th Cir. 2004) (“Invoking the doctrine of the law of the case, the courts,

including our court, forbid a prisoner to relitigate in a collateral proceeding an issue that was

decided on his direct appeal.”).

ANALYSIS

Construing pro se Petitioner’s Section 2255 motion liberally, see Munson v. Gaetz, 673

F.3d 630, 633 (7th Cir. 2012), he brings the following claims: (1) there was no trial evidence

supporting the fact that at the time of the receipt of the payment at issue in Count Seven,

Petitioner knew that it was a non-compete payment; (2) even if Petitioner knew the payment was

a non-compete payment, there was no trial evidence that he knew that the non-compete

agreement did not exist; (3) the timing of Hollinger International’s SEC disclosures regarding

the non-compete payments cannot be the basis of his conviction; (4) he was not required to

disclose his non-compete payment in his 2002 Questionnaire for Directors and Officers,

therefore, this cannot be a basis of his conviction; (5) the government did not present any trial

evidence that he was aware of any falsehoods in Hollinger International’s disclosures; and (6)

the Court erred in dismissing Count Seven as to his co-defendant Mark Kipnis because there was

more evidence in the record regarding the supplemental payment as to Kipnis than evidence

regarding his supplemental payment.

Petitioner made these arguments to the Seventh Circuit on direct appeal. (07-4080, R.

37, Open. Brief, at 23-24, 27, 58, 68-69.) And, as the Seventh Circuit teaches, a “§ 2255 motion

is ‘neither a recapitulation of nor a substitute for a direct appeal,’” therefore, “[i]ssues that were

raised on direct appeal may not be reconsidered on a § 2255 motion absent changed

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circumstances.” Varela, 481 F.3d at 935-36 (citations omitted); see also Olmstead v. United

States, 55 F.3d 316, 319 (7th Cir. 1995) (“in the absence of changed circumstances of fact or

law, we will not reconsider an issue which was already decided on direct appeal”). 

Nevertheless, Petitioner contends that although these arguments were made on direct

appeal, he did not make these arguments after the United States Supreme Court remanded the

matter to the Seventh Circuit in 2010. Contrary to Petitioner’s argument, the Seventh Circuit

addressed Petitioner’s conviction for pecuniary fraud in the context of Petitioner’s similar

arguments made in his Circuit Rule 54 Statement and Response. (07-4080, R. 93, Rule 54 Stmt.,

at 25-26; R. 99, Resp. at 8-9.) See United States v. Black, 625 F.3d 386, 392-94 (7th Cir. 2010);

see also Black, 530 F.3d at 600 (“The evidence established a conventional fraud, that is, a theft

of money or other property from Hollinger by misrepresentations and misleading omissions

amounting to fraud, in violation of 18 U.S.C. § 1341.”). 

In any event, Petitioner also maintains that there has been a change in circumstances,

namely, the Supreme Court’s 2010 decisions regarding the honest services fraud statute, that

allows the Court to reconsider his already-made appellate arguments. See Skilling v. United

States, 561 U.S. ___, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010); Black v. United States, 561 U.S.

___, 130 S.Ct. 2963, 177 L.Ed.2d 695 (2010). Petitioner, however, does not stand convicted of

fraud based on the honest services statute, but, instead, stands convicted of one count of

pecuniary fraud. In short, the Black and Skilling decisions do not impact Petitioner’s pecuniary

fraud conviction, and thus these decisions do not constitute a change in circumstances allowing

Petitioner to re-open the arguments he made on direct appeal. See Varela, 481 F.3d at 936. 

Petitioner’s last argument in his Section 2255 motion is that because the defendants’

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appeal focused on his co-defendant Conrad Black, he did not get to argue issues separately and

“the most important argument for him was not even considered by the Circuit Court.” Viewing

Petitioner’s pro se Section 2255 motion liberally, see Munson, 673 F.3d at 633, it appears that

Petitioner is bringing a claim that his appellate counsel was constitutionally ineffective in

violation of the Sixth Amendment. 

As with ineffective assistance of trial counsel claims, courts apply the two-prong test set

forth in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), to

evaluate the effectiveness of appellate counsel. See Suggs v. United States, 513 F.3d 675, 678

(7th Cir. 2008). Under the Strickland performance prong, an appellate counsel’s performance is

constitutionally deficient if counsel fails to appeal an issue that is obvious and clearly stronger

than the claims counsel raised on appeal. See id.; see also Johnson v. Thurmer, 624 F.3d 786,

793 (7th Cir. 2010). To establish the Strickland prejudice prong, Petitioner must show that

“there is a reasonable probability that the issue his appellate attorney failed to raise would have

altered the outcome of the appeal, had it been raised.” Brown v. Finnan, 598 F.3d 416, 425 (7th

Cir. 2010); see also Suggs, 513 F.3d at 678. 

In his Section 2255 motion, Petitioner contends that the most important argument was

that the government did not present any evidence at trial that he knew the reason for the $15,000

payment or that he knew the $15,000 was a non-compete payment in the first instance. 

Petitioner’s appellate counsel, however, did make this argument on appeal and the Seventh

Circuit addressed Petitioner’s contention in the context of the ostrich instruction:

Remember that the defendants received the payments in question not from

Hollinger but from APC [American Publishing Company], which the evidence

showed did not owe them any management fees. If you receive a check in the

mail for $1 million that you have no reason to think you’re entitled to, you cannot

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just deposit it and when prosecuted for theft say you didn’t know you weren’t

entitled to the money – that it might have been a random gift from an eccentric

billionaire. You would have strongly suspected that you weren’t entitled to the

money and you would therefore have had a duty to investigate. By shutting your

eyes you tacitly confessed your all-but-certain knowledge that you were stealing

the money. 

Black, 530 F.3d at 604-05 (citations omitted); see also id. at 599 (“The checks were drawn on

APC, though the evidence was that the defendants had no right to management fees from that

entity, and were backdated to the year in which APC had sold most of its newspapers. The

purpose of the backdating was – or so the jury could find – to make the compensation for the

covenants not to compete seem less preposterous.”).

In sum, Petitioner’s last argument is factually baseless because appellate counsel and the

Seventh Circuit addressed Petitioner’s argument that there was no evidence that he knew the

reason for the $15,000 payment or knew that it was a non-compete payment. As such, any such

ineffective assistance of counsel claim fails. 

CERTIFICATE OF APPEALABILITY

Under the 2009 Amendments to Rule 11(a) of the Rules Governing Section 2255

Proceedings, the “district court must issue or deny a certificate of appealability when it enters a

final order adverse to the applicant.” Therefore, the Court must determine whether to grant

Petitioner a certificate of appealability pursuant to 28 U.S.C. § 2253(c)(2) in the present

Memorandum, Opinion, and Order.

Under 28 U.S.C. § 2253(c)(2), a petitioner does not have the absolute right to appeal a

district court’s denial of his Section 2255 motion, instead, he must first request a certificate of

appealability. See Miller-El v. Cockrell, 537 U.S. 322, 335, 123 S.Ct. 1029, 154 L.Ed.2d 931

(2003); Lavin v. Rednour, 641 F.3d 830, 832 (7th Cir. 2011). A petitioner is entitled to a

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certificate of appealability only if he can make a substantial showing of the denial of a

constitutional right. See Miller-El, 537 U.S. at 336; Narvaez v. United States, 641 F.3d 877, 881

(7th Cir. 2011); 28 U.S.C. § 2253(c)(2). Under this standard, Petitioner must demonstrate that

“reasonable jurists could debate whether (or, for that matter, agree that) the petition should have

been resolved in a different manner or that the issues presented were adequate to deserve

encouragement to proceed further.” Miller-El, 537 U.S. at 336 (quoting Slack v. McDaniel, 529

U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000)). 

Here, Petitioner has not established that jurists of reason would debate that his Section

2255 motion should have been resolved differently in light of the fact that he raised all but one of

his Section 2255 arguments on direct appeal. See Varela, 481 F.3d at 935. Furthermore,

Petitioner cannot establish that jurists of reason would debate his ineffective assistance of

appellate counsel claim because it is factually baseless. Therefore, the Court declines to certify

any issues for appeal.

CONCLUSION

For these reasons, the Court denies Petitioner’s motion to vacate, set aside, or correct his

sentence pursuant to 28 U.S.C. § 2255 and declines to certify any issues for appeal pursuant to

28 U.S.C. § 2253(c)(2).

Dated: August 14, 2012

ENTERED

______________________________

AMY J. ST. EVE

United States District Court Judge

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