Opinion ID: 6500514
Heading Depth: 2
Heading Rank: 2

Heading: Pelullo’s Motion for Remand Based on Giglio

Text: Evidence116 Unbeknownst to the Defendants or the District Court, Robert O’Neal – the FirstPlus chairman, who flipped and 115 We remain cognizant of the countervailing due process interests in having one’s arguments heard in court. One can imagine a scenario in which a party is cut off too soon and is precluded from making an argument essential to its case. Accordingly, we encourage district courts to exercise discretion cautiously in the face of such countervailing interests. Still, wherever the outer bounds of that discretion may be, the District Court was well within them here. 116 We do not apply a standard of review in the typical sense, since Pelullo could not have raised this issue – which first came to the parties’ attention while this appeal was pending – before the District Court. Rather, we look to the burden of proof applicable to Brady and Giglio claims, as discussed herein. Pelullo bases his motion on 28 U.S.C. § 2106, which provides that, when reviewing a decision on appeal, we “may remand the cause and … require such further proceedings to be had as may be just under the circumstances.” Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812 (5th Cir. 2004). “Section 2106 grants us broad power when it comes to how best to dispose of a matter under our review.” Id. at 819. Where a remand to the district court “would be an exercise in futility[,]” 161 testified for the government at trial – was himself under investigation in an unrelated criminal matter in the Western District of Texas while trial in this case was underway. That investigation culminated in O’Neal’s indictment in December 2020, which the government brought to the Defendants’ attention a few months later, after it had been unsealed. Pelullo now asks us to remand his case to the District Court so that he can seek an evidentiary hearing and move for a new trial pursuant to Rule 33 based on what he says was the government’s failure to disclose exculpatory evidence in violation of Brady v. Maryland, 373 U.S. 83 (1963), and Giglio v. United States, 405 U.S. 150 (1972).117 We decline to grant such relief. According to his indictment, O’Neal ran chiropractic clinics in Texas and received millions of dollars in illegal kickbacks from hospitals and other healthcare providers, payments that he disguised as marketing fees and shared with we may “make a complete disposition of the case” ourselves rather than having the District Court consider the matter in the first instance. Id.; Beck v. Reliance Steel Prods. Co., 860 F.2d 576, 581 (3d Cir. 1988). 117 The other Defendants all join in Pelullo’s motion. In a second motion filed nearly a year after his original one, Pelullo makes the same arguments but also says we should dismiss the indictment against him with prejudice or order the District Court to do so. He offers no support for that extraordinary demand. Nor could he; the remedy for a Brady or Giglio violation is a new trial, not dismissal. Giglio v. United States, 405 U.S. 150, 153-55 (1972). 162 certain co-conspirators. 118 The indictment charged that, beginning in 2008 and continuing through 2013, O’Neal conspired with others to defraud the government and to solicit and collect healthcare kickbacks, in violation of 18 U.S.C. § 371. O’Neal was also charged with four counts of violating, and aiding and abetting the violation of, the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b)(2). When a prosecutor in this case notified the Defendants of the Texas investigation in March 2021, he relayed the message from the O’Neal prosecution team in Texas that O’Neal first became a subject of investigation in 2013 and was not identified as a target until 2017. The Texas prosecutors also reportedly said that “the investigation of O’Neal remained covert” through at least the conclusion of the Defendants’ trial in July 2014. (3d Cir. D.I. 345-3 at 3.) O’Neal was ultimately indicted in December 2020 and pled guilty the following August. The prosecution team here asserts that it “did not learn O’Neal was even being investigated,” or that “his prosecution concerned conduct dating back to 2008,” until late January 2021. (3d Cir. D.I. 356.) And it did not obtain a copy of the 118 In this context, a “kickback” is a payment made to encourage a healthcare provider to refer a patient to the defendant or to compensate the healthcare provider for doing so. 42 U.S.C. § 1320a-7b(b). Those payments are illegal when the patient’s medical care is covered in whole or in part by a federal healthcare program such as Medicare or Medicaid. Id. 163 indictment until early February. 119 It also claims to have confirmed that, before early 2021, none of the “surviving members of the prosecution team” – who include prosecutors, FBI investigators, and a special agent for the Department of Labor – knew that “O’Neal was under investigation for any crimes with which he has now been charged.” (3d Cir. D.I. 345-3 at 2-3.) Pelullo doesn’t buy that explanation. He notes that the crimes alleged in O’Neal’s indictment “temporally overlap[ped]” with O’Neal’s involvement in FirstPlus and his cooperation with the prosecutors in this case (3d Cir. D.I. 345- 2 at 12-15), and he asks us to allow him to develop an evidentiary record in the District Court as to what the prosecutors knew about O’Neal at the time of trial. That record, he says, will enable him to move for a new trial based on the government’s violation of its duty to turn over all “evidence [that] is material either to guilt or to punishment[,]” Brady, 373 U.S. at 87, including evidence “affecting [the] credibility” of its trial witnesses, Giglio, 405 U.S. at 153-55. The government’s failure to turn over such evidence, if the information were in its actual or constructive possession, could violate his due process rights and require a new trial. Id.; 119 The government initially represented that “Pelullo’s prosecution team knew nothing about the investigation of O’Neal or the conduct prompting his indictment until shortly before the February 2021 unsealing of that indictment.” (3d Cir. D.I. 346 at 2.) It then clarified that the indictment had been unsealed in early January 2021 – which is confirmed by the docket – but nonetheless insisted that it did not know about the investigation until late January. 164 Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 291-92 (3d Cir. 2016) (en banc). The government responds that any knowledge the Texas prosecutors had about the O’Neal investigation should not be imputed to those in New Jersey and that, accordingly, the information was not in its possession – in any meaningful sense – at the time of trial. In this case, we need not wrestle with the question of imputation of knowledge, because Pelullo’s motion for a new trial would fail anyway for two distinct reasons: it would be time-barred and it would not rest on a material nondisclosure. First, remanding the case would prove fruitless because any motion would be time-barred. Rule 33(b)(1) provides that a motion for a new trial based on newly discovered evidence must be brought within three years of the verdict. See United States v. O’Malley, 833 F.3d 810, 813 (7th Cir. 2016) (applying Rule 33(b)(1) to Brady and Giglio claim); United States v. Battles, 745 F.3d 436, 447 (10th Cir. 2014) (same for Brady claim). That deadline is an “inflexible” one “meant to bring a definite end to judicial proceedings[.]” United States v. Higgs, 504 F.3d 456, 464 (3d Cir. 2007). Pelullo contends that it is unfair to apply that rule here, where it was the government who kept the investigation hidden until more than three years after he was convicted, but that characterization, even if it were accurate, does not allow us to disregard Rule 33’s mandatory language. And, as the government points out, refusing to ignore the time limits of Rule 33 does not leave a defendant utterly bereft of the ability to pursue a Giglio claim. Once his convictions become final, he may be able to timely seek appropriate relief in the District Court pursuant to 28 U.S.C. § 2255. See O’Malley, 833 F.3d at 813 (concluding that “a 165 postjudgment motion based on newly discovered evidence which happens to invoke a constitutional theory” – such as Giglio – “can be brought under Rule 33(b)(1) or § 2255”). Second, Pelullo offers us no reason to believe that the nondisclosure of the investigation into O’Neal was material. The government’s failure to disclose potential impeachment evidence violates due process, and thus requires a new trial, “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. Bagley, 473 U.S. 667, 682 (1985). Put somewhat differently, a Brady or Giglio claim requires a showing that the undisclosed evidence “could reasonably be taken to put the whole case in such a different light as to undermine confidence in the verdict.” Kyles v. Whitley, 514 U.S. 419, 435 (1995). The O’Neal evidence does not change the lighting here in any material way. Had the Defendants known in advance that O’Neal was a subject (but not yet a target) of an investigation – and had they used that evidence to undermine O’Neal’s credibility on the stand or to persuade the government not to call O’Neal as a witness – that would not have saved them from conviction. Pelullo and the government disagree as to O’Neal’s significance to the prosecution’s case-in-chief: Pelullo calls him ”the Government’s main witness” (3d Cir. D.I. 345-2 at 45), while the government says that his testimony was of a “limited nature” (3d Cir. D.I. 345-3 at 3). It appears to us that O’Neal’s testimony about the looting of FirstPlus was one piece of corroboration within a mass of damning evidence. There were nineteen other government witnesses and extensive documentary evidence. See, e.g., supra Sections II.G, III.A-B, IV.B, V.C-E. In the face of that overwhelming proof of guilt, 166 the Defendants could not have evaded conviction by pointing out that O’Neal ran a shady chiropractic practice, nor by persuading the government to sideline him at trial. Cf. Giglio, 405 U.S. at 151, 154-55 (finding due process violation where government did not reveal impeachment evidence about “the only witness linking petitioner with the crime[,]” on whose testimony “the Government’s case depended almost entirely”). Notwithstanding that other evidence, Pelullo insists that O’Neal’s testimony was essential to establishing the fraudulent acquisitions of Scarfo’s and Pelullo’s shell companies and to connecting Pelullo to LCN. He first argues that “the Government’s theory that the acquisitions were fraudulent depended directly upon O’Neal’s testimony, and specifically the notion that the acquisitions were made without [O’Neal’s] knowledge or consent.” (3d Cir. D.I. 345-2 at 18.) But Pelullo’s counsel already attacked O’Neal’s credibility on that claim at trial. He impeached O’Neal with a transcript of a board meeting in which O’Neal discussed the acquisition of Rutgers and authorized William Maxwell to sign off on the sale on his behalf. We seriously doubt that impeaching O’Neal with evidence of his unrelated wrongdoing would have changed his credibility in the eyes of the jury. As for Pelullo’s claim that O’Neal’s testimony was necessary to prove Pelullo’s mob ties, his own briefing undercuts that assertion. O’Neal testified that he was told by William Maxwell that Pelullo “was a consultant for Mr. Scarfo and his group[,]” which O’Neal took to mean that Pelullo was connected to “[o]rganized crime.” (JAC at 2595-96.) Pelullo himself portrays that statement as “cryptic and devoid of actual content[,]” and he likewise describes O’Neal’s testimony about his perception of Scarfo as “the Godfather” as unpersuasive 167 and speculative. (3d Cir. D.I. 345-2 at 18-22.) And, as Pelullo points out, O’Neal admitted on cross-examination that his only knowledge of organized crime came from watching movies and news coverage about Italian-American mobsters. More importantly, the proof of Pelullo’s mob ties hardly depended on O’Neal’s passing impressions. Pelullo’s own statements and long history with the Scarfos proved that point.120 In short, the evidence of O’Neal’s participation in the kickback scheme does not “put the whole case in such a different light as to undermine confidence in the verdict.”121 120 As already noted, see supra Section IV.B.1, the evidence of Pelullo’s mob ties outside of what O’Neal had to say was extensive. The government presented expert testimony about Scarfo’s and Scarfo’s father’s records of involvement with LCN. It then connected Pelullo to LCN through evidence of, inter alia, his effectively familial relationship with the Scarfos, his efforts to ensure Scarfo profited from FirstPlus without doing any work, and his fear of the consequences of failing to provide financially for Scarfo’s father. 121 Pelullo also uses his motion to address several other issues, including alleged deficiencies in the government’s pretrial compliance with its disclosure obligations unrelated to the O’Neal investigation and post-trial discoveries of purported inconsistencies in O’Neal’s testimony. He cites little in support of those allegations – some of which appear to duplicate arguments raised in his primary briefing – and offers no reason why those issues could not have been fully argued in his opening brief, so we decline to address them. See United 168 Kyles, 514 U.S. at 435. Remanding Pelullo’s case – and delaying the resolution of his and the other Defendants’ appeals – would therefore inevitably fail to secure him a new trial, and so a remand is not in order.