IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA : CRIMINAL ACTION

:

v. :

:

STEVEN ALLEN SCHWARTZ : NO. 04-231

MEMORANDUM

Bartle, J. May 15, 2012

Before the court is the motion of defendant Steven

Schwartz ("Schwartz") to vacate, set aside, or correct his

sentence under 28 U.S.C. § 2255. 

Schwartz was convicted by a jury on November 18, 2004

of two counts of bank fraud in violation of 18 U.S.C. § 1344 and

seven counts of wire fraud in violation of 18 U.S.C. § 1343. He

was sentenced to eighteen months' imprisonment and a term of

supervised release of five years on May 18, 2005. His conviction

and sentence were affirmed on appeal. See United States v.

Schwartz, 315 F. App'x 412 (3d Cir. 2009). 

Schwartz subsequently filed a pro se § 2255 petition in

which he alleges a deprivation of his Sixth Amendment right to

effective assistance of counsel through various errors made at

the trial and on appeal. Schwartz also submits in his petition

that the government engaged in outrageous misconduct throughout

this action and that he is actually innocent. He requests that

we hold an evidentiary hearing as to his claims.

Case 2:04-cr-00231-HB Document 118 Filed 05/15/12 Page 1 of 25
I.

In January, 2003, Schwartz was indicted for conspiracy

to commit bank fraud, wire fraud and identity theft, and wire

fraud, bank fraud, identity theft, and use of a fictitious name

for mailing, in violation of 18 U.S.C. §§ 371, 1028(a)(7), 1342,

1343, and 1344. These charges stemmed from a Ponzi scheme

Schwartz operated from 1997 to 2002. See United States v.

Schwartz, No. 03-35 (E.D. Pa. Jan. 16, 2003) (the "03-35

action"). The case was assigned to Judge Stewart Dalzell. While

on pretrial release, the government discovered that Schwartz had

engaged in further potentially-criminal behavior and moved for

pretrial detention. 

At the detention hearing before Judge Dalzell, the

government presented evidence that Schwartz made online payments

to credit card companies from bank accounts with insufficient

funds. These payments increased Schwartz's available credit

line. He then incurred new charges on the credit cards before

the payments were rejected. Schwartz testified that he had not

intended to defraud the credit card companies. Instead, Schwartz

asserted that he had believed he would have sufficient funds to

cover the online payments based on an anticipated $9,000 loan

from a Mr. William Catanese and a company called Great American

Mortgage. He also expected to receive money from the refinancing

of his mother's home. After the hearing, Judge Dalzell found

that there was probable cause to believe Schwartz had engaged in

criminal activity while on supervised release and therefore a

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rebuttable presumption arose under the Bail Reform Act that no

condition or combinations of conditions could prevent further

harm to the community. See 18 U.S.C. § 3148(b). Based on this

finding, Judge Dalzell granted the government's motion and

revoked Schwartz's bail. 

On April 22, 2004, a grand jury returned an indictment

in this second case charging Schwartz with two counts of bank

fraud, in violation of 18 U.S.C. § 1344. See United States v.

Schwartz, No. 04-231 (E.D. Pa. Apr. 22, 2004) (the "04-231

action"). On June 3, 2004, the grand jury returned a superseding

indictment charging Schwartz with an additional seven counts of

wire fraud in violation of 18 U.S.C. § 1343. The prosecution

stemming from the indictment in the 04-231 action was assigned to

the undersigned. 

Mark Cedrone, Esquire, who represented Schwartz in the

03-35 matter in front of Judge Dalzell, was appointed to

represent Schwartz in connection with the 04-231 action. 

However, on June 25, 2004, Cedrone moved to withdraw. According

to Cedrone, Schwartz was dissatisfied with Cedrone's failure to

interview witnesses. Additionally, Schwartz believed that

Cedrone had encouraged a woman to whom Schwartz owed money,

Michelle Poll, to go to the Federal Bureau of Investigation to

make a complaint against Schwartz and therefore that Cedrone was

"the reason" Schwartz was in custody. On July 9, 2004, the

undersigned granted the motion to withdraw and appointed Mark S.

Greenberg, Esquire to represent Schwartz.

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Before trial, the government moved to consolidate this

prosecution with the 03-35 action pending before Judge Dalzell. 

Judge Dalzell found that allowing the actions to proceed

independently would serve the interests of justice because the

04-231 action was a "straightforward, temporally limited" case

while the 03-35 action involved "far more complicated charges." 

Judge Dalzell also found that consolidation could prejudice

Schwartz's mother, Ilene Schwartz, who was indicted as a codefendant in the 03-35 action. 

The government also filed a motion in limine under Rule

404(b) of the Federal Rules of Evidence. In this motion, the

government put forth evidence that Schwartz had a prior

conviction for bank fraud. See United States v. Schwartz, 899

F.2d 243 (3d Cir. 1990). The government also sought to introduce

evidence that Schwartz had engaged in check kiting in the 03-35

action similar to the acts charged in the 04-231 action. The

undersigned declined to rule on the motion before trial. 

On November 17, 2004, Schwartz proceeded to trial on

the indictment in the 04-231 action. Charles Becker, Assistant

Vice President of the Financial Crime Division of Citizens Bank,

testified that Citizens Bank was insured by the Federal Deposit

Insurance Corporation ("FDIC") and authenticated Schwartz's bank

records. Becker testified that on June 6, 2003 Schwartz made

online payments as follows: (1) $4,349.59 to Capital One; (2)

$3,664.15 to a credit card issued by Providian National Bank

("Providian"); (3) $440 to Capital One; and (4) $380 to Capital

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One. These payments did not clear Schwartz's Citizen Bank

account due to insufficient funds and were returned on June 9,

2003. Becker also stated that on July 3, 2003 Schwartz made an

online payment of $2,250 to Capital One which was returned

several days later for insufficient funds. Finally, Becker

testified that in March, 2004, Schwartz made a $1,000 payment to

PrePaid ATM and a $500 payment to PrePaid ATM which were likewise

returned for insufficient funds.

John Fletcher, Department Manager of Fraud for

Providian, also testified. He stated that Providian was

currently insured by the FDIC. Fletcher noted that on June 5,

2003, Schwartz made an online payment to his Providian account in

the amount of $3,364.15. This payment brought Schwartz's

account, which had a total credit line of $3,676, to a balance of

approximately $0. Schwartz then incurred additional charges on

the account from June 7-10, 2003. After these charges were made,

the payment was returned for insufficient funds.

Cecelie Garcia, a Process Manager for Capital One, next

appeared as a witness for the government. She testified that

Capital One was insured by the FDIC and authenticated Schwartz's

account statements for a Platinum Mastercard, a Platinum Visa,

and a Mastercard issued by Capital One. Garcia stated that

Schwartz made online payments of $440 and $2,250 to his Platinum

Mastercard which were both returned for insufficient funds.

Garcia added that Schwartz made an online payment of $4,439.59 to

his Mastercard on June 5, 2003 which was again returned for

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insufficient funds several days later. Finally, Garcia told the

jury that Schwartz made an online payment of $380 from his

PrePaid ATM account to his Platinum Visa which was also returned

for insufficient funds. 

The government then called Alan Goodman, a retired

attorney who purchased the home of Schwartz's mother. Goodman

testified that Schwartz's mother received $94,826.25 from the

sale.

Alan Ross, owner of PrePaid ATM, took the stand. Ross

explained that PrePaid ATM was a debit card company. Through a

service called "Instant ACH," the company offered instant credit

for deposits after a customer had maintained an account for more

than thirty days. Ross testified that he had prior convictions

for bankruptcy fraud and for violating the Wire Act, "for

accepting bets as a U.S. citizen." 

According to Ross, Schwartz made transfers on February

23 and March 4, 5, and 7, 2003 from his Citizens bank account to

his PrePaid ATM account which he utilized almost immediately. At

the time of those transfers, Schwartz had insufficient funds in

his Citizens Bank account. However, Schwartz later repaid

PrePaid ATM with deposits made from I Commerce, an internet

gambling company. 

Schwartz then deposited $1,000 into his PrePaid ATM

account on March 11, 2003 and withdrew that money three minutes

later. Schwartz made another deposit of $1,000 on March 12,

2004, which he withdrew two minutes later. The next day,

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Schwartz made another deposit of $500 and transferred the money

out of his account eight minutes later. However, none of these

deposits cleared. Ross testified that Schwartz was notified that

his checks to PrePaid ATM had bounced but that Schwartz never

responded. Later, Schwartz's mother contacted Ross and repaid

the full amount due, $2,500 plus fees, on March 29, 2004. 

Finally, on behalf of the government, FBI Special Agent Barbara

Verica presented a spreadsheet summarizing Schwartz's accounts

with Citizens Bank, Providian, Capital One, and PrePaid ATM.

The defense presented evidence that the victim credit

card companies had all been repaid and that Schwartz remained

their customer. Defense counsel brought out on cross-examination

that the banks and credit card companies had benefitted from fees

charged to Schwartz for returned checks, overdrafts, past-due

payments, and for going above his credit limit. 

Ultimately, the jury returned a verdict of guilty on

all nine counts. Schwartz moved to discharge his counsel. The

court granted the request and allowed Schwartz to proceed pro se. 

The court then gave the jury a supplemental special interrogatory

which asked whether Schwartz had utilized "sophisticated means"

and whether he had intended any amount of loss. The jury found 1

1. The court submitted the supplemental special interrogatory

pursuant to agreement of the parties and the Supreme Court's

decision in Blakely v. Washington, 542 U.S. 296, 301-03 (2004). 

It is now clear that this special interrogatory is not necessary

in light of United States v. Booker, 543 U.S. 220 (2005).

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that Schwartz had not utilized sophisticated means and had not

intended any loss. 

Schwartz subsequently filed a post-verdict motion for

acquittal and a new trial. Cedrone, original counsel for

Schwartz, was again appointed to represent Schwartz for purposes

of post-verdict motions, sentencing, and appeal. On April 11,

2005, this court denied Schwartz's post-trial motions and

sentenced Schwartz to eighteen months' imprisonment. 

Meanwhile in the 03-35 action before Judge Dalzell,

Schwartz was convicted on 15 of the 27 counts of the indictment

on April 22, 2005 after a 15-day trial. He was sentenced on

July 26, 2005 to 225 months' imprisonment to be served

consecutively with the sentence imposed in the 04-231 action. 

2

On appeal in the 04-231 action, Schwartz asserted that

the jury had returned inconsistent verdicts. He also challenged

the sufficiency of the evidence and asserted that the government

had improperly utilized immunized testimony. Additionally,

Schwartz filed a pro se supplemental brief which raised a myriad

of claims. On March 4, 2009, the Court of Appeals affirmed this 3

court's judgment and found that the arguments raised in

2. Although Schwartz has completed the term of eighteen months'

imprisonment imposed in the 04-231 action, the Supreme Court has

instructed that a defendant serving consecutive sentences remains

"in custody" until all are served and may attack the earlier

conviction even if that particular sentence has already expired. 

See Garlotte v. Fordice, 515 U.S. 39, 41 (1995).

3. Schwartz's appeal in this matter was consolidated with his

appeal in the 03-35 action.

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Schwartz's pro se supplemental brief were meritless. Schwartz's

petition for a writ of certiorari was denied by the Supreme Court

on April 26, 2010. This timely § 2255 petition followed. 

III.

As stated above, Schwartz alleges ineffective

assistance of counsel under the standard set forth in Strickland

v. Washington. 466 U.S. 668 (1984). Specifically, he asserts

that counsel: (1) failed to interview witnesses and to conduct a

proper investigation; (2) neglected to develop a defense

strategy; (3) failed to move to dismiss the indictment and

disqualify the prosecution; (4) failed to submit jury

instructions and jury interrogatories and to object to erroneous

instructions; (5) failed to research the law; (6) violated

attorney-client privilege; (7) coerced him not to testify; (8)

made unreasonable trial errors; (9) committed various errors in

connection with sentencing; and (10) "omitted significant and

obvious issues while pursuing issues that were clearly and

significantly weaker" on appeal. 

Under the Strickland standard, Schwartz bears the

burden of proving that: (1) counsel's performance was deficient;

and (2) he suffered prejudice as a result. Id. The first

element requires that "[counsel's] performance was, under all the

circumstances, unreasonable under prevailing professional norms." 

United States v. Day, 969 F.2d 39, 42 (3d Cir. 1992). Our

scrutiny of counsel's performance is highly deferential. We

presume that counsel's actions were undertaken in accordance with

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professional standards and as part of a "sound trial strategy." 

Strickland, 466 U.S. at 689 (quoting Michel v. Louisiana, 350

U.S. 91, 101 (1955)). 

To satisfy the prejudice element, Schwartz must show

"there is a reasonable probability that, but for counsel's

unprofessional errors, the result of the proceeding would have

been different." Id. at 694. A "reasonable probability" is one

that is "sufficient to undermine confidence in the outcome." Id. 

When ruling on a § 2255 petition, the court may address the

prejudice prong first "and reject an ineffectiveness claim solely

on the ground that the defendant was not prejudiced." Rolan v.

Vaughn, 445 F.3d 671, 678 (3d Cir. 2006). 

We will begin with Schwartz's contention that counsel

failed to conduct a sufficient investigation and to interview

eight witnesses: (1) his mother Ilene Schwartz; (2) Judge

Dalzell's courtroom deputy, Eileen Adler; (3) Alan Goodman; (4)

Allen Ross; (5) Providian employee Fletcher; (6) Capital One

employee Garcia; (7) Jennie Artzt; and (8) Norman Tarnoff. 

The decision as to which witnesses to interview and

call to testify is strategic and thus counsel is entitled to a

high level of deference. E.g., Diggs v. Owens, 833 F.2d 439, 446

(3d Cir. 1987). Trial counsel need not interview every witness

suggested by the defendant. Lewis v. Mazurkiewicz, 915 F.2d 106,

113 (3d Cir. 1990). 

At the start of trial, Schwartz raised these very same

concerns. His counsel explained to the court on the record:

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I have had the investigator interview

witnesses as Mr. Schwartz has requested and

other witnesses have not been interviewed,

primarily, because I have statements of

theirs, that they have been giving to the

Government.... And also, frankly, I wouldn't

call those witnesses in my case in chief. 

With respect to listening to Mr. Schwartz, I

have met with Mr. Schwartz on at least four

or five occasions.... And we have gone into

detail about the defenses and how the case

should be approached. I have a strategy

involved here as–-as to how I think the case

should be approached and I, frankly, think

that it's a winning strategy.... But I can

tell the Court that I have interviewed

witnesses. I have conducted an

investigation. I have researched the issues. 

And I have done everything I can to

effectuate my–-my role as--counsel for Mr.

Schwartz. 

Schwartz's contentions do not rise to the level of

constitutional deficiency as set forth in Strickland. Counsel

did interview Allen Ross. Four of these witnesses, Goodman,

Ross, Fletcher, and Garcia, testified at trial for the government

and were effectively cross-examined. 

 According to Schwartz, Ilene Schwartz, Artzt, and

Tarnoff would have provided exculpatory evidence regarding his

"good faith" defenses, namely that Schwartz was prevented from

depositing a check to cover his online payments because of a

"death threat" from Tarnoff. Schwartz submits that his mother

Ilene Schwartz also would have testified that his former attorney

Mark Cedrone advised him that it was legal to "play the float."

Contrary to Schwartz's arguments, his counsel had valid

reasons not to interview/and or call these witnesses. As his

mother and co-defendant in the 03-35 action, Ilene Schwartz

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likely would not have been considered by the jury to be a

credible witness. His counsel wished to avoid use of Schwartz's

"good faith" defenses because they could open the door to

damaging evidence of Schwartz's past conviction for bank fraud

and the introduction of similar acts under Rule 404(b) of the

Federal Rules of Evidence as a result of his pending indictment

in the 03-35 action. 

The record shows that his counsel's trial strategy was

to seek to establish that Schwartz engaged in ordinary, noncriminal banking transactions, that he had not intended to

defraud or harm the victim financial institutions, and that he

had ultimately repaid the lost funds. This was a reasonable

trial strategy and is consistent with many of the same arguments

Schwartz advances in the instant § 2255 petition. Counsel cannot

be faulted merely because this strategy ultimately did not result

in a verdict in Schwartz's favor. 

For similar reasons, Schwartz's claims of improper

investigation and failure to create a proper defense strategy

also fail. Counsel did in fact hire an investigator and move for

permission to expend up to $1,000 on his investigation. The

funds available for investigation under the Criminal Justice Act

are not unlimited. See 18 U.S.C. § 3006A(e)(3). As discussed

above, counsel's decision not to pursue Schwartz's "good faith"

defenses was strategic and reasonable in light of Schwartz's

prior bank fraud conviction. Accordingly, counsel did not

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provide ineffective assistance in the investigation of Schwartz's

case and creation of a defense strategy. 

We turn next to Schwartz's claim that his counsel was

ineffective for failing to move for dismissal of the indictment

and for disqualification of the prosecution. Schwartz argues

that the government violated the Fifth Amendment to the United

States Constitution by using information obtained after being

exposed to immunized testimony given by Schwartz at his bail

revocation hearing before Judge Dalzell on March 25, 2004. 

Under United States v. Perry, a judicial grant of usefruits immunity may be available to a defendant who testifies at

a bail revocation hearing. 788 F.2d 100, 115-16 (3d Cir. 1986). 

This is because:

[T]he presumption of dangerousness [under the

Bail Reform Act], if unrebutted by evidence

offered by the defendant, places the

defendant in the position of risking

self-incrimination by testifying as to his

future intentions, or running the grave civil

disability of preventive detention. 

Id. at 115. Thus, testimony by a defendant at a bail revocation

hearing without a grant of immunity would "pose[] a serious issue

of unconstitutionality under the fifth amendment privilege

against self-incrimination." Id. 

As discussed above, Schwartz testified at the bail

revocation hearing that he had expected a loan from a Mr. William

Catanese and funds from the refinancing of his mother's home to

cover some of the online payments at issue in this action. The

government has conceded that, upon hearing this testimony, it

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proceeded to investigate this information and present it to a

grand jury pursuant to its policy to disclose to the grand jury

substantial evidence of which the prosecutor is personally aware

that may directly negate the guilt of an investigation target.

Schwartz raised this issue both in his post-trial

motion for a judgment of acquittal and on appeal. Our Court of

Appeals concluded that even assuming the government somehow

misused Schwartz's immunized testimony, such misuse was harmless. 

See Schwartz, No. 05-2770, slip op. at *17. The court stated: 

Schwartz's bail-hearing testimony tended to

exculpate him–-not inculpate him--by

suggesting that he lacked the intent to

defraud at the time he made the withdrawals. 

And that Schwartz's mother did indeed sell

her home is not relevant to any of the

elements of any of the fraud charges on which

the grand jury ultimately indicted him. 

Id. at *17-18 n.5. We agree with this analysis. Counsel was not

ineffective for failing to move to dismiss the indictment and

disqualify the prosecution team for this reason.

Schwartz also asserts that his counsel should have

moved to dismiss the indictment because the prosecution engaged

in "outrageous misconduct" before the grand jury by presenting

perjured testimony to the grand jury. According to Schwartz, FBI

agent Verica testified in front of the grand jury that Schwartz

was expecting the $9,000 loan from William Catanese by wire when

instead Schwartz expected the loan in the form of the check. 

This argument is totally without merit. The discrepancy between

the statements of Schwartz and Verica is trivial at best and

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likely the result of an honest mistake, which does not rise to

the level of perjury. See, e.g., United States v. Rose, 215 F.2d

617, 623 (3d Cir. 1954). Furthermore, as discussed above, this

testimony was largely exculpatory and therefore Schwartz cannot

demonstrate he was prejudiced by counsel's failure to move to

dismiss the indictment on this ground. In fact, Schwartz raised

this argument in a pro se motion to dismiss the indictment which

the court orally denied before the start of the trial. 

We turn next to Schwartz's claim that counsel was

ineffective for failing to submit jury interrogatories and jury

instructions and to object to erroneous instructions. 

Specifically, Schwartz maintains that Greenberg should have

requested several instructions, including that: (1) Schwartz

must have intended to cause some deprivation or loss to the

alleged victim's property rights under McNally v. United States,

483 U.S. 350 (1987); (2) intent to defraud requires more than

merely an intent to deceive the bank in order to obtain money

from it under United States v. Thomas, 315 F.3d 190 (3d Cir.

2002); (3) the government must show Schwartz contemplated some

actual harm or injury as it relates to wire and bank fraud

according to United States v. Russo, 166 F. App'x 654 (3d Cir.

2006); (4) Schwartz must have made a fraudulent misrepresentation

or omission reasonably calculated to deceive persons of ordinary

prudence and comprehension under United States v. Pearlstein, 576

F.2d 531, 535 (3d Cir. 1978); (5) the crime of bank fraud entails

a materiality requirement according to Neder v. United States,

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527 U.S. 1 (1999); (6) "a check is not a representation the money

is there" according to Williams v. United States, 458 U.S. 279

(1982); (7) Schwartz could be found guilty of fraud based on a

failure to disclose material information only if he had a duty to

speak under Chiarella v. United States, 445 U.S. 222 (1980); and

(8) some unspecified instruction as outlined in Skilling v.

United States, 130 S. Ct. 2896 (2010). 

This court gave the following instructions:

In order to sustain its burden of proof for

the crime of bank fraud, the government must

prove the following three (3) elements beyond

a reasonable doubt for each count: (1) the

defendant executed or attempted to execute a

scheme to defraud Providian Bank in Count One

of the indictment and Capital One Bank in

Count Two, or to obtain money by means of

false or fraudulent pretenses,

representations, or promises from those

institutions; (2) he did so knowingly and

with intent to defraud; and (3) Providian

Bank and Capital One Bank were federally

insured at the time of the offense.

....

In order to sustain its burden of proof for

the crime of wire fraud, the government must

prove the following three (3) elements beyond

a reasonable doubt for each count: (1) the

defendant knowingly devised a scheme to

defraud or to obtain money or property by

materially false or fraudulent pretenses,

representations, or promises; (2) he did so

with the intent to defraud; and (3) in

advancing or furthering or carrying out this

scheme, he used or caused to be used a wire

communication in interstate commerce.

As further explanation of the elements, the court

instructed: "A scheme to defraud or to obtain money, is any

deliberate plan of action or course of conduct by which someone

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intends to deceive or to cheat another or by which someone

intends to deprive another of something of value." We also

charged: "It is not necessary for the government to prove that

the defendant was actually successful in defrauding anyone or was

successful in obtaining money by means of false or fraudulent

pretenses, representat[ions] or promises. Thus, it is the

scheme, itself, which is unlawful, not the result."

As to intent, we explained to the jury:

To act with an intent to defraud means to act

knowingly and with the intention or the

purpose to deceive or to cheat. A person

acts knowingly when he is aware of what he is

doing and is not acting due to some accident

or mistake. An intent to defraud generally

is accompanied by a desire or purpose to

bring about some gain or benefit to oneself

or another person or by a desire or a purpose

to cause some loss to some person.

We further instructed that:

Honest mistakes in judgment or errors in

management do not rise to the level of intent

to defraud. However, good faith does not

mean the hope that eventually, a scheme will

come out "even" or the hope that the money,

which is taken by a scheme will eventually be

paid back. Similarly, the fact that the

money obtained through a scheme to defraud

may have been used for legitimate purposes or

to pay business expenses, is not a defense.

These instructions were consistent with the law at the

time as it relates to wire and bank fraud. Schwartz's list of

jury instructions that his counsel allegedly should have offered

either rely on misstatements of law or on cases which are

inapplicable to the charges against him. In its opinion

affirming his earlier conviction for bank fraud, our Court of

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Appeals instructed that "a person may commit a bank fraud without

making false or fraudulent pretenses, representations or

promises, as this is the 'plain meaning' of the statute." 

Schwartz, 899 F.2d at 246. Thus, Schwartz did not have to make a

false statement in order to be convicted under the bank and wire

fraud statutes. Id.; see also United States v. Jimenez, 513 F.3d

62, 75-76 (3d Cir. 2008). 

Williams, on which Schwartz relies, is inapplicable. 

That case dealt with whether a check can constitute a "false

statement" with regards to 18 U.S.C. § 1014, which makes it a

crime to "knowingly mak[e] any false statement or report," or

"willfully overvalu[e] any land, property or security." 458 U.S.

at 279. It did not address the bank and wire fraud statutes and

therefore counsel was not ineffective for failing to request an

instruction based on it. 

Similarly, Schwartz's reliance on Thomas is misplaced. 

In Thomas, the defendant, who was employed as a home health care

aide to an elderly individual, wrote several checks belonging to

the elderly individual and pocketed the funds for her own benefit

instead of using them for the elderly individual's expenses. 315

F.3d at 194. Because the record indicated that there was no loss

to the banks, let alone any intent to cause such a loss, the

Court of Appeals reversed the defendant's conviction for bank

fraud. Id. at 202. In a later case distinguishing Thomas, our

Court of Appeals stated that "where the bank is the 'target of

the deception,' it makes no difference whether the perpetrator

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had an intent to harm the bank." United States v. Leahy, 445

F.3d 634, 642-43 (3d Cir. 2006). Therefore, an instruction that

"the intent element of bank fraud is an intent to deceive the

bank in order to obtain from it money or other property" was

upheld as appropriate. Id. at 647.

Schwartz's claim that his counsel should have requested

an instruction that the fraud had to be reasonably calculated to

deceive persons of "ordinary prudence and comprehension" also

fails. In its charge, this court instructed:

The government does not have to prove that

the alleged victims of the scheme to defraud

knew that they were being defrauded. It is

not a defense that the alleged victims ...

may have acted gullibly, carelessly, naively

or negligent[ly], which led to their being

defrauded. The alleged victims' negligence

is ... not a defense--to a criminal conduct.

This instruction accurately reflects the general rule that "[t]he

negligence of the victim in failing to discover a fraudulent

scheme is not a defense to criminal conduct." United States v.

Coyle, 63 F.3d 1239, 1244 (3d Cir. 1995). The remainder of the

jury instructions offered by Schwartz in his petition either was

in fact addressed by the court in its charge or is simply

incorrect.

In this section of his petition, Schwartz also states

that counsel was ineffective for failing to have the charge

conference transcribed and for failing to have Schwartz attend

the conference. However, Rule 43(b) of the Federal Rules of

Criminal Procedure provides that a defendant has no right to be

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present at a proceeding which "involves only a conference or

hearing on a question of law." Additionally, there is no

requirement that a charge conference held in chambers be

transcribed. Instead, this is left to the discretion of the

court. 28 U.S.C. § 753(b); see also In re Beard, 811 F.2d 818,

833 (4th Cir. 1987); United States v. Jenkins, 442 F.2d 429, 438

(5th Cir. 1971). 

Schwartz also asserts that counsel was ineffective for

failing to request voir dire to determine whether the jury had

animus towards gambling activity or towards Schwartz because of

his prior conviction. The record shows that the court asked the

jury panel during voir dire whether they knew of Schwartz. No

jurors responded that they knew of him, and therefore they could

not have known of his prior conviction. Because gambling

activity was largely not at issue at trial, counsel cannot be

found ineffective for failing to request voir dire on this

subject. 

Schwartz further claims that counsel provided

ineffective assistance and violated his Fifth Amendment rights by

coercing him not to testify. His contention is frivolous in

light of the record. Immediately before trial, the court

conducted the following colloquy: 

The Court: Are you aware that you have a

constitutional right not to testify at this

criminal trial?

Schwartz: I do, your Honor.

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The Court: And that the jury will not be

permitted to draw any inference against you,

if you do not testify?

Schwartz: I'm–-that's what I understand is

supposed to happen, your Honor.

The Court: Yes.

The Court: Do you also understand that you

have a constitutional right to testify, if

you want to do that?

Schwartz: Yes, your Honor.

The Court: Do you understand that the

decision whether or not to testify is your

decision?

Schwartz: I understand that it's–-that it's

my decision, however, that could be affected

based on the strategy that--that defense

counsel takes.

The Court: I understand. And you have a--a

very able lawyer, actually, a well-known

member of the Bar in Philadelphia. And while

he can give you advice about the issue,

ultimately, it's your decision and not his.

Schwartz: Yes, sir.

As discussed above, counsel had a valid strategic reason to

advise Schwartz against taking the stand because Schwartz had a

prior conviction for bank fraud and was facing another

prosecution for similar conduct. His testimony was likely to

open the door to this Rule 404(b) evidence on cross-examination. 

Schwartz's credibility as a witness also would have been

vulnerable to impeachment under Rule 609 of the Federal Rules of

Evidence. Accordingly, counsel did not provide ineffective

assistance of counsel in connection with Schwartz's right to

testify. 

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We next address Schwartz's assertion that counsel was

ineffective for failing to move for a judgment of acquittal on

certain grounds. In support of this claim, Schwartz misstates

the facts related to his conduct. His repayment of the funds in

issue is not a defense to fraud charges and therefore could not

form the basis of a motion for a judgment of acquittal. See

Jimenez, 513 F.3d at 75. Schwartz's assertion that counsel

should have moved for a judgment of acquittal due to the

government's failure to prove that the victim financial

institutions were FDIC insured is also without merit. The

testimony of employees Garcia, Becker, and Fletcher that the

financial institutions were FDIC insured at the time of trial was

sufficient evidence to satisfy this element of the crimes

charged. See, e.g., United States v. Sliker, 751 F.2d 477, 484-

85 (2d Cir. 1984). 

Schwartz further argues that the government engaged in

"outrageous misconduct" throughout his trial. Related to this

claim, Schwartz maintains that the government entered into a

secret immunity agreement with government witness Ross, owner of

PrePaid ATM. In support, Schwartz has submitted the affidavit of

Mark H. Schaffer, a licensed private investigator. This

affidavit states in part:

Mr. Ross advised that he had been personally

involved in the gambling industry, and feared

that testimony he might provide would be used

against him in some fashion. As such, Mr.

Ross engaged personal counsel.... Counsel

for Mr. Ross then told Mr. Ross that as a

result of counsel speaking with the

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prosecution, that they (the government)

agreed and promised that they (the

government) would not use anything that Mr.

Ross said during testimony against him. 

Failure to disclose such an agreement warrants reversal of a

conviction "only if there is a reasonable probability that, had

the evidence been disclosed to the defense, the result of the

proceeding would have been different." United States v.

Pflaumer, 774 F.2d 1224, 1226 (3d Cir. 1985) (quoting United

States v. Bagley, 473 U.S. 667, 682 (1985)). Here, there was

substantial evidence of Schwartz's guilt. Ross's testimony was

corroborated by the records introduced at trial and by other

government witnesses, including Special Agent Verica, Cecelie

Garcia, and Charles Becker. Accordingly, we conclude that any

failure of the government to disclose the alleged "secret

immunity agreement" with Ross was harmless.

Cedrone, Schwartz's new counsel at sentencing, did not

provide ineffective assistance of counsel. Before sentencing,

the government submitted to this court a sentencing memorandum

recommending a sentencing range of two to eight months'

imprisonment under the United States Sentencing Guidelines based

on the jury's finding that the amount of intended loss was $0 and

that Schwartz did not use sophisticated means. The court then

held a conference call with counsel regarding the effect of

United States v. Booker on the Guideline calculation. 543 U.S.

220 (2005). Based on Booker, the court could determine

sentencing factors such as the amount of loss and use of

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sophisticated means by a preponderance of the evidence and was

not bound by the jury's findings regarding these issues. See

Jiminez, 513 F.3d at 88. The government then submitted a revised

sentencing memorandum suggesting a Guidelines range of 18-24

months' imprisonment.

This sentencing range was appropriate under the

Guidelines based on the court's finding by a preponderance of the

evidence that Schwartz intended a loss of $16,914.14 and had used

sophisticated means. His counsel challenged these findings in

both a sentencing memorandum and at the sentencing hearing. 

Counsel was not constitutionally ineffective merely because his

arguments related to sentencing were unsuccessful. The sentence

imposed was legally and procedurally proper and therefore counsel

was not ineffective for failing to object further. 

Counsel also did not provide ineffective assistance of

counsel on appeal. Where the decision to appeal a particular

issue is concerned, "[t]he test for prejudice under Strickland is

not whether petitioners would likely prevail upon remand, but

whether ... [the Court of Appeals] would have likely reversed and

ordered a remand had the issue been raised on direct appeal." 

United States v. Mannino, 212 F.3d 835, 844 (3d Cir. 2000). On

appeal, counsel argued that Schwartz's conviction should be

vacated because: (1) the jury rendered inconsistent verdicts;

(2) the government failed to present sufficient evidence to

support the conviction; and (3) the government improperly used

immunized testimony obtained at the bail hearing. 

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Under Strickland, appellate counsel was entitled to

make strategic choices regarding the issues presented on appeal

and was not required to present every claim suggested by

Schwartz. The fact that Schwartz submitted his own pro se

appellate brief, which the Court of Appeals considered and found

to be "meritless," demonstrates that Schwartz was not prejudiced

by his counsel's failure to raise the issues he now sets forth as

"dead bang" winning arguments. 

The remainder of Schwartz's claims are without merit.4

Accordingly, the petition of Schwartz under § 2255 will be

denied. A certificate of appealability will not issue. 5 6

4. Among these claims, Schwartz asserts that he is "actually

innocent." The Supreme Court has never recognized a claim of

actual innocence as a freestanding ground for relief under

§ 2255. See House v. Bell, 547 U.S. 518, 554-55 (2006); Herrera

v. Collins, 506 U.S. 390, 400 (1993). Regardless, Schwartz's

claim relies on misstatements of law and fact. Schwartz has

failed to show that "no juror, acting reasonably, would have

voted to find him guilty beyond a reasonable doubt." Schlup v.

Delo, 513 U.S. 298, 329 (1995). 

5. In support of his petition, Schwartz and his mother have

filed under seal several letters to this court. We have

considered these submissions and find that they do not affect our

conclusion. 

6. Because the "motion and the files and records of the case

conclusively show" that Schwartz is not entitled to relief, we

will deny his request for an evidentiary hearing. 28 U.S.C.

§ 2255(b); see also Solis v. United States, 252 F.3d 289, 295 (3d

Cir. 2001). 

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