UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF INDIANA 

HAMMOND DIVISION

MARK WARNE, ) 

) 

 Movant, ) Cause No. 2:17CV401-PPS 

 v. ) 

 ) Arising from 2:16CR23-PPS 

UNITED STATES OF AMERICA, ) 

 ) 

 Respondent. ) 

OPINION AND ORDER

 In this section 2255 petition, Mark Warne challenges his bank fraud conviction 

claiming he received ineffective assistance of counsel. After the Government responded 

to his initial arguments, Warne obtained counsel who filed a reply memorandum 

contending an enhancement was not factually supported, and his defense counsel erred 

by not recommending placement in a residential drug and alcohol program. None of 

Warne’s arguments have merit. 

Background 

Warne was a bank president who stole millions of dollars from his employer. 

This earned him a ten count indictment for bank fraud in violation of 18 U.S.C. § 1344 

and identity theft in violation of 18 U.S.C. § 1028(a)(7). [DE 1.] Warne pleaded guilty to 

the bank fraud alleged in Count 1, and in exchange for his plea, the Government agreed 

to dismiss the other counts. [DE 39 at 11-12.] 

As part of his plea agreement, Warne agreed that he: 

caused Community State Bank to make loans based upon false and 

fraudulent applications. I submitted loans in the names of 
2 

Individuals A, B, C, and D in the amounts set out in the Indictment. 

I did not provide Individuals A, B, C, and D with the funds from 

these loans and Individual[s] A, B, C, and D were unaware of these 

loans. I used the proceeds of these loans for my own personal 

purposes. As President of Community State Bank, I prepared one 

set of minutes of the Board of Directors meetings that omitted any 

reference to the loans made to Individuals A, B, C, and D. I 

prepared the minutes in this way to avoid having the Board of 

Directors look into the fraudulent loans. I falsified a second set of 

minutes of the meetings of the Board of Directors and included 

references to the loans made to Individuals A, B, C and D in these 

minutes. I provided and caused to be provided this second set of 

false minutes to auditors with the Federal Deposit Insurance 

Corporation (“FDIC”). I did so to mislead FDIC auditors into 

believing these loans were reviewed by the Community State Bank 

Board of Directors. I did this all between September of 2010 and 

September of 2015 in the Newton County, which is in the Northern 

District of Indiana. At all times relevant to the Indictment, 

Community State Bank was insured by the FDIC. 

[DE 9 at 8-9.] 

The plea agreement also set forth the agreement between the Government and 

Warne that his base offense level was 7, and that the offense “substantially jeopardized 

the safety and soundness of a financial institution, thereby increasing [the] offense level 

by 4 points, pursuant to United States Sentencing Guideline, Section 2B1.1(b)(16)(B).” 

[DE 9 at 5.] During the change of plea hearing, I questioned Warne about this, and he 

agreed that he substantially jeopardized the soundness or safety of a financial 

institution and that he was subjected to an increase in the offense level because of that. 

[DE 39 at 10.] Warne also acknowledged in his owns words that the approximately $3.5 

million he made in fraudulent loans “had a tremendous impact” on the bank as it was a 

small state bank. [Id. at 24.] Additionally, the plea agreement contained an express 

waiver of Warne’s right to file a section 2255 motion: 
3 

I understand that the law gives a convicted person the right to 

appeal the conviction and the sentence imposed. I also understand 

that no one can predict the precise sentence that will be imposed, 

and that the Court has jurisdiction and authority to impose any 

sentence within the statutory maximum set for my offenses as set 

forth in this plea agreement. With this understanding and in 

consideration of the government’s entry into this plea agreement, I 

expressly waive my right to appeal or to contest my conviction and 

all components of my sentence or the manner in which my 

conviction or my sentence was determined or imposed, to any 

Court on any ground other than a claim of ineffective assistance of 

counsel, including any appeal under Title 18, United States Code, 

Section 3742 or any post-conviction proceeding, including but not 

limited to, a proceeding under Title 28, United States Code, Section 

2255. 

[DE 9 at 6.] 

During the change of plea hearing, I asked Warne about this waiver of appeal, 

and he agreed that he understood the concept and approved of it knowingly and 

voluntarily. [DE 39 at 13-15.] Warne further testified during the hearing, that he was 

fully satisfied with the advice and the representation of counsel that he received. [DE 

39 at 4.] I accepted the plea of guilty. [DE 13.] 

 Prior to the sentencing, the Government filed a memorandum which argued for a 

lower loss amount than that called for in the Presentence Investigation Report. [DE 24.] 

The PSR established that Warne obtained slightly over $6,000,000 in fraudulent loans 

over a period of 5 years. [DE 24 at 2.] Defense counsel agreed with the Government’s 

favorable position, which calculated a lower loss as the amount of fraudulent loans 

minus the amount of money that Warne paid the bank for those loans. [DE 24.] I 

applied the lower loss amount at sentencing, which was between $1,500,000 and 

$3,500,000. [DE 31 at 5.] 
4 

At the sentencing hearing, defense counsel presented the testimony of six 

witnesses and argued the sentence should be mitigated due to Warne’s community 

involvement, dedication to family, and lack of criminal history. [DE 31 at 14-23.] The 

Government presented aggravating facts, including testimony from the current bank 

president, who explained that the bank was crucial to the lives of many in the 

community (Brook, Indiana only had a population of 1,000 people), and how Warne’s 

actions “had a severe impact [on] the safety and soundness” of the bank. [Id. at 9.] 

Many of the shareholders of the bank were retired farmers, teachers, and business 

owners, and the losses suffered by the bank due to the fraud led to a reduction in the 

book value of the stock of a little over 17 percent. [Id. at 10.] 

Ultimately, I sentenced Warne to seventy-eight months imprisonment. [DE 26.] 

I also ordered supervised release in the amount of 2 years. Id. I then dismissed the 

remaining counts and issued a final judgment on October 20, 2016. [DE 27, 30.] Warne 

did not file a direct appeal. 

Warne, acting pro se, timely filed his section 2255 motion and memorandum in 

support arguing that his counsel was ineffective because Warne did not fully 

understand the consequences of his plea, his counsel did not vigorously represent 

Warne at sentencing, and his counsel should have recognized the need for an expert. 

[DE 33.] The Government filed a response addressing these arguments. [DE 42]. 

 A few months later, attorney Visvaldis Kupsis appeared on behalf of Warne. [DE 

45.] After receiving extensions of time, Kupsis filed a reply memorandum making the 

following two arguments: (1) there existed insufficient facts to support the four level 
5 

enhancement under USSG §2B1.1(16)(B), and defense counsel’s failure to object to the 

same constituted ineffective assistance of counsel; and (2) counsel improperly advised 

Warne that he would not be eligible for a residential drug and alcohol treatment 

program and failed to request a recommendation from the Court for placement in the 

program. [DE 51.] I ordered the Government to respond to the arguments presented in 

the reply, and the Government filed a sur-reply [DE 54]. Therefore, this matter is fully 

briefed and ripe for adjudication. 

Discussion 

 Habeas corpus relief under 28 U.S.C. section 2255 is reserved for "extraordinary 

situations." Prewitt v. United States, 83 F.3d 812, 816 (7th Cir. 1996). In order to proceed 

on a habeas corpus petition pursuant to section 2255, a federal prisoner must show that 

the district court sentenced him in violation of the Constitution or laws of the United 

States, or that the sentence was in excess of the maximum authorized by law, or is 

otherwise subject to collateral attack. Id. 

 Only two claims under section 2255 are available in the Seventh Circuit to a 

person who waived the right to appeal and to bring a collateral attack: (1) the defendant 

received ineffective counsel regarding the waiver (or the plea agreement as a whole) 

and its negotiation, United States v. Smith, 759 F.3d 702, 707 (7th Cir. 2014); or (2) the 

waiver was not knowingly or voluntarily made. Mason v. United States, 211 F.3d 1065, 

1068 (7th Cir. 2000). 

 
6 

Claims Set Forth in Warne’s Original Section 2255 Motion 

I’ll start with the claims Warne made pro se before Mr. Kupsis filed his 

appearance in this case. Warne first contends that as a result of his counsel’s ineffective 

assistance, he did not fully understand the consequences of his decision to plea. [DE 33 

at 8.] This is a tough one to swallow in light of the repeated statements Warne made 

under oath at the change of plea hearing, as well as the written change of plea that he 

signed. 

 Any ineffective assistance of counsel claim is governed by the 2-pronged test set 

forth in Strickland v. Washington, 466 U.S. 668 (1984). To prevail, Warne must first show 

the specific acts or omissions of his attorney “fell below an objective standard of 

reasonableness” and were “outside the wide range of professionally competent 

assistance” and second, he must show prejudice, which entails showing by “a 

reasonable probability that, but for counsel’s unprofessional errors, the result of the 

proceeding would have been different.” Strickland, 466 U.S. at 688, 690, 694; see also 

Barker v. United States, 7 F.3d 629, 633 (7th Cir. 1993). There is a “strong presumption” 

that counsel’s conduct falls within the wide range of reasonable professional assistance. 

Strickland, 466 U.S. at 689. 

To establish the prejudice element for claims of ineffectiveness in the plea 

process, Warne would have to prove that: (1) because of his attorney’s ineffective 

assistance, he misunderstood the consequences of his plea agreement, and (2) he would 

not have pled guilty absent that misunderstanding. Thompson v. United States, 732 F.3d 
7 

826 (7th Cir. 2013). In other words, Warne would not have pleaded guilty “but for” the 

attorney’s mistakes. United States v. Carroll, 412 F.3d 787, 793 (7th Cir. 2005). 

Although Warne now claims his attorney did not counsel or advise him about 

the nature and elements of the charges [DE 33 at 8], Warne’s plea agreement states he 

believed his “lawyer has done all that anyone could do to counsel and assist [him], and 

that [Warne] now understand[s] the proceedings in this case against me.” [DE 9 at 9.] 

For starters, during the plea hearing, I went over the elements of the offense with 

Warne and asked him if he understood them. He said that he did. [DE 39 at 21-22.] 

Additionally, during the plea colloquy, Warne agreed that he was satisfied with his 

counsel, and that he had an opportunity to go over his plea agreement with counsel. [Id.

at 4.] These sworn statements are entitled to a “presumption of verity.” United States v. 

Gasich, No. 2:14-cr-63, 2016 WL 3671148, at *3 (N.D. Ind. July 11, 2016) (quoting United 

States v. Loutos, 383 F.3d 615, 619 (7th Cir. 2004)). To the extent Warne is now claiming 

his plea was not knowingly and voluntarily made, “[s]elf-serving statements offered 

after the plea hearing generally fall in the face of contradictory voluntary statements 

made by the defendant during a plea hearing – the latter are presumed true.” United 

States v. Mosley, 35 F.3d 569 (Table), 1994 WL 503016, at *3 (7th Cir. 1994). 

 It is certainly true that Federal Rule of Criminal Procedure 11 requires that a 

defendant’s guilty plea be voluntary and knowingly made. In looking at the totality of 

the circumstances, as I must, there is no question that Warne’s guilty plea was made 

knowingly and voluntarily. See Loutos, 383 F.3d at 619; United States v. Ellison, 835 F.2d 
8 

687, 693 (7th Cir. 1987) (the “whole point of the plea proceeding (the Rule 11 colloquy) 

is to establish that the plea was knowingly and voluntarily made.”). 

As the former president of a bank, Warne is clearly a well-educated and 

sophisticated businessman. During my lengthy discussion with him, he gave no 

indication whatsoever that he did not understand the plea proceeding or the 

consequences of what he was doing. Based upon the plain language of the plea 

agreement and the lengthy plea colloquy I held with Warne, I find that he made a 

knowing and voluntary plea. As the Seventh Circuit has stated, “[j]ustice would be illserved, and the utility of the Rule 11 colloquy would be undermined, by allowing [the 

defendant] to renege on his representation under oath to the district court.” Hutchings 

v. United States, 618 F.3d 693, 699 (7th Cir. 2010); see also Berkey v. United States, 318 F.3d 

768 (7th Cir. 2003) (rejecting ineffective assistance claim where, despite defendant’s 

contrary arguments, his statements at the plea colloquy confirmed he understood the 

sentencing process and his potential sentences, and no promises were made to induce 

his plea). 

Warne implies that his attorney was ineffective because during a meeting with 

the FDIC in October, before Warne was even indicted, the attorney allegedly did not 

protect Warne from making incriminating statements and his counsel described 

Warne’s actions as a “Ponzi scheme.” [DE 33 at 11.] But I don’t see how this relates to 

Warne’s decision to plead guilty in this case. The evidence had already been amassed 

against Warne. They obviously had the goods on him. The fact that his counsel 

recognized that fact and articulated it out loud is hardly surprising. More importantly, 
9 

Warne has done nothing to show that his counsel’s actions resulted in any prejudice - or 

that he would not have pleaded guilty but for the attorney’s supposed errors. In fact, 

even now, Warne does not request to withdraw his plea, rather, he asks that “his 

sentence be set aside and Warne be appointed counsel to revisit the plea phase and 

sentencing to address the issues” raised by his motion. [DE 33 at 14-15.] 

Warne also faults his attorney for not vigorously representing him during the 

sentencing phase. Where counsel’s alleged error occurred during the sentencing phase, 

the petitioner has to show there was “a reasonable probability that he received 

additional prison time because of counsel’s error.” Glover v. United States, 531 U.S. 198 

(2001). 

Warne points out that his attorney did not file a sentencing memorandum on his 

behalf or an objection to the Government’s memorandum, but this is not eyebrow 

raising, as the Government’s memorandum argued for a lower loss amount than that 

established in the PSR. [DE 24.] Warne claims that his attorney offered nothing on his 

behalf at sentencing, contending “[a]ll he did was recite poetry!” [DE 33 at 12.] But this 

is inaccurate. Counsel called six witnesses to the stand who all made compelling 

arguments on Warne’s behalf. They spoke about his integrity, loving family, 

volunteering, leadership qualities, coaching, community involvement, and his remorse. 

[DE 31 at 14-28.] Warne’s attorney also made his own argument to the court, 

highlighting the lack of criminal record, his community involvement, the loss of his 

reputation, and his financial destruction. [Id. at 28-32.] Counsel noted Warne’s 

cooperation and that “when this matter was discovered, Mark immediately, at the bank, 
10 

admitted his fault and signed a statement admitting his fault. That was done without 

the benefit of counsel.” [Id. at 32.] He also detailed Warne’s turning over of assets for 

restitution, including selling his family home, surrendering his car, farm equipment, 

and other assets. [Id. at 32-34.] Counsel also discussed the deterrent value in sentencing 

Warne, and requested a below-Guideline sentence. [Id. at 35-36.] While it is true that 

counsel recited a short poem, he did much more than that, and I cannot say that his 

performance was constitutionally deficient or that Warne was prejudiced by it. 

The last argument Warne advances in his petition is that his counsel was 

ineffective because he failed to hire an expert and, given the complexity of the bank 

regulatory environment, he should have recognized the need for an expert. [DE 33 at 

13.] Warne claims he needed “outside expertise to effectively challenge the evidentiary 

value of the FDIC’s findings,” but other than this speculation, he does not state how this 

would have affected his decision to plead guilty, or what any expert would have 

revealed that would have changed his sentence. 

Claims Set Forth in Warne’s Reply Memorandum 

After the Government filed a response to the arguments advanced by Warne pro 

se in his section 2255 motion, Warne obtained counsel, who then filed what he titled 

“Defendant’s Memorandum in Response,” but which was really a reply in support of 

his motion. Two arguments are set forth in the reply by his new counsel: first, 

insufficient facts existed to support a four level enhancement under U.S.S.G. 

§2B1.1(16)(B) and defense counsel’s failure to object to the enhancement constituted 

ineffective assistance of counsel; and second, that defense counsel improperly advised 
11 

Warne that he was not eligible for a residential drug and alcohol treatment program 

and failed to request a recommendation from the court for placement in the program. 

 Timeliness is an issue with these claims set forth in Warne’s reply. Section 2255 

has a one-year limitation period. 28 U.S.C. § 2255(f). When a petitioner files his motion, 

he must state all available grounds for relief and the facts supporting those claims. 

Section 2255 Proceeding Rule 2(b). Amendments to a section 2255 motion may be made 

once as a matter of course before the responsive pleading is served. Mayle v. Felix, 545 

U.S. 644, 655 (2005). But in this case, Warne filed his reply after the Government had 

already responded to his initial arguments. A petitioner may amend his motion with 

leave of court, but Warne did not request leave. Fed. R. Civ. P. 15(a)(2). If the statute of 

limitations has run, the amendment may relate back to the time of the original motion, 

but only if the supplemental claims arise out of the same “conduct, transaction or 

occurrence.” Fed. R. Civ. P. 15(c)(1)(B). 

 There is an argument that the new “substantial jeopardy” enhancement claim 

relates back to the claims in the original motion. While Warne did not specifically refer 

to the four level enhancement under U.S.S.G. 2B1.1(b)(16)(B) in his original motion or 

memorandum, Warne did argue that his defense attorney was ineffective because he 

“did not put forth any argument in rebuttal for the enhancements” and that he should 

have hired an expert to testify at sentencing. [DE 33 at 13-14.] However, even assuming 

that this claim relates back and is timely, it still fails on the merits. In his plea 

agreement, Warne agreed that “[t]he offense substantially jeopardized the safety and 

soundness of a financial institution, thereby increasing my offense level by 4 points, 
12 

pursuant to United States Sentencing Guideline, Section 2B1.1(b)(16)(B)” and when I 

questioned him about it during his plea colloquy, Warne agreed that he jeopardized the 

soundness or safety of the institution. [DE 9 at 5; DE 39 at 10.] Because Warne agreed 

to this in his plea, I can’t say that his counsel’s failure to object at the sentencing hearing 

was error. 

Moreover, there was substantial evidence in the record for me to find that this 

enhancement applied. Warne points me to the sentencing guidelines application notes 

that provide a list of factors to consider in determining whether the safety and 

soundness of a financial institution was substantially justified including that: 

(i) the financial institution became insolvent; 

(ii) the financial institution substantially reduced benefits to pensioners or 

insured; 

(iii) the financial institution was unable on demand to refund fully any 

deposit, payment, or investment; 

(iv) the financial institution was so depleted of its assets as to be forced to 

merge with another institution in order to continue active operation; 

(v) one or more of the criteria and clauses i-iv was likely to result from the 

offense but did not result from the offense because of federal government 

intervention, such as bailout. 

U.S. SENTENCING GUIDELINES MANUAL § 2B1.1(b)(16)(B) cmt. n. 13(A) (2016). He 

argues that none of these enumerated events occurred, including there was no federal 

bailout. Because the bank losses led to a reduction in the book value of the stock of a 

little more than 17 percent and one dividend was unable to be paid to the shareholders, 

I think it is possible that both subsections (ii) and (iii) in the comment apply. [DE 31 at 
13 

10-11.] However, regardless, the Guidelines specifically state that these factors are 

“non-exhaustive.” § 2B1.1(b)(16)(B) cmt. n. 13(A). Thus, I can consider other factors as 

well in determining whether the bank’s safety and soundness was jeopardized. 

Here, the current bank president testified at the sentencing hearing that the 42 

fraudulent loans had a severe impact on the safety and soundness of his institution. 

[DE 31 at 9-10.] It led to charge-offs of over $5.1 million and a reduction in total assets 

of just over 8 percent. [Id. at 10.] There was a reduction in net worth for the 192 

shareholders (mostly community members), and in 2015 the bank was unable to pay a 

dividend to the shareholders. [Id. at 10-11.] Local customers could have lost their 

homes and/or businesses due to the actions of Warne. [Id. at 11.] Warne admitted in 

his own words that because it was a small bank, the fraudulent loans “had a 

tremendous impact on them.” [DE 39 at 24.] Here, given the huge amount of money 

that Warne took from the bank and the small size of the financial institution, the 

enhancement for jeopardizing the soundness of a financial institution was proper. See, 

e.g., United States v. Simmerman, 850 F.3d 829, 833-35 (6th Cir. 2017) (noting the list of 

factors is “non-exhaustive” and finding even though the small credit union did not 

become financially insolvent and there was no government bailout, the enhancement 

was appropriate where the net worth ratio fell and it was critically undercapitalized). 

 Last, Warne contends that he was diagnosed with depression and anxiety which 

led to him using medication to sleep, and his counsel provided ineffective assistance of 

counsel because he did not recommend the residential substance abuse program or ask 

the court for a recommendation in the program. [DE 51 at 5-7.] This claim does not 
14 

seem to be related at all to the claims set forth in the initial section 2255 motion, and 

thus is time barred. But even if it was timely, it would still fail. 

 I must grant a section 2255 motion when a defendant’s “sentence was imposed in 

violation of the Constitution or laws of the United States.” 28 U.S.C. § 2255. However, 

“[h]abeas corpus relief under 28 U.S.C. § 2255 is reserved for extraordinary situations.” 

Prewitt, 83 F.3d at 816. “Relief under § 2255 is available only for errors of constitutional 

or jurisdictional magnitude, or where the error represents a fundamental defect which 

inherently results in a complete miscarriage of justice.” Kelly v. United States, 29 F.3d 

1107, 1112 (7th Cir. 1994) (overruled on other grounds) (quotations omitted). Here, I 

cannot say the failure to recommend placement in a residential substance abuse 

program rises to the level of a constitutional error. Moreover, Warne submitted to an 

interview by a probation officer on May 10, 2016, with his attorney present, and during 

that interview, Warne reported no mental or substance abuse issues. [DE 18 ¶¶ 53, 54.] 

Finally, only the Bureau of Prisons has the authority to admit offenders into the 

residential substance abuse program. While a recommendation from the court could be 

helpful, it is not determinable, thus Warne cannot show that he suffered any prejudice 

from not receiving a court recommendation. 

Finally, pursuant to Rule 11 of the Rules Governing Section 2255 Proceedings, a 

district court must “issue or deny a certificate of appealability when it enters a final 

order adverse to the applicant.” A certificate of appealability may issue only if the 

applicant “has made a substantial showing of the denial of a constitutional right.” 28 

U.S.C. § 2253(c)(2). To make such a showing, a defendant must show that “reasonable 
15 

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.” Slack v. McDaniel, 529 U.S. 473, 475 (U.S. 

2000) (internal quotation marks and citation omitted). 

For the reasons set forth above, Warne has not stated any grounds for relief 

under section 2255. The Court finds no basis for a determination that reasonable jurists 

would find this decision debatable or incorrect or that the issues deserve

encouragement to proceed further. Therefore, a certificate of appealability will not be 

issued. 

Conclusion 

For the reasons set for above, the section 2255 motion [DE 32] is DENIED and 

DISMISSED WITH PREJUDICE. The Clerk shall enter final judgment accordingly. 

Additionally, the Motion to Appoint Counsel [DE 35] is DENIED AS MOOT. Finally, 

the motion for in forma pauperis application [DE 37] is DENIED AS MOOT because

there is no filing fee for section 2255 motions. 

SO ORDERED. 

ENTERED: December 18, 2018 

 /s/ Philip P. Simon

PHILIP P. SIMON, JUDGE 

UNITED STATES DISTRICT COURT