Opinion ID: 903291
Heading Depth: 2
Heading Rank: 2

Heading: Other Proceedings Involving Pena

Text: At the same time that Pena was facing these charges, he was working for the construction firm of his father-in-law Carlos Nunez, SDVO Contractors, L.P. (“SDVO”). SDVO was involved in three controversies regarding an Arizona construction project for the Department of Defense (DOD)—two civil lawsuits and one criminal investigation: 1) Jeffrey C. Stone, Inc. v. SDVO1: a civil matter in Arizona, in which Pena was a named individual defendant; 2) Bank of the West v. SDVO Contractors, LP: a civil matter that was proceeding before Judge Montalvo, where Stanton represented SDVO; and 1 In January 2010, Jeffrey C. Stone, Inc., filed suit against SDVO, Nunez, Pena, Pena’s wife, and others, alleging that the defendants breached a teaming contract between Jeffrey Stone and SDVO and committed various acts of misrepresentation and fraud in relation to the Arizona project. SDVO, Nunez, and the Penas were represented by local counsel and by Stanton in that proceeding. 2 Case: 11-50482 Document: 00512279158 Page: 3 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 3) A criminal investigation into the Arizona project that potentially implicated Pena and several of Stanton’s civil SDVO clients. The litigation surrounding the Arizona project arose from the DOD’s erroneous transfer of funds into SDVO’s bank account and SDVO’s subsequent withdrawal of most of those funds. Specifically, in April 2010, the United States Property and Fiscal Officer for the Arizona National Guard (USPFO) issued a termination-for-default notice to SDVO, ending the contract for the Arizona project. As a result of this termination, the USPFO demanded that the surety perform its obligation under the performance bond. In June 2010, however, the USPFO inadvertently wired a $733,720 payment for the project into SDVO’s account at the Bank of the West (“the Bank”), not into the surety’s bank account. When the surety and the USPFO realized the error and contacted the Bank to reverse the transaction or freeze the funds, the Bank advised that the funds had already been disbursed in their entirety, with the exception of an IRS levy placed on the account in the amount of approximately $159,000. In July 2010, the Bank filed a state interpleader action for the $159,000, naming as defendants SDVO, the IRS, and the DOD. After this interpleader action was removed to federal court, Stanton appeared as counsel for SDVO. The criminal investigation relating to the Arizona construction project involved SDVO’s alleged misappropriation of these same funds. C. Pre-trial Proceedings for the Instant Offenses In July 2010, an Assistant United States Attorney (“AUSA”) informed Stanton of an ongoing Arizona criminal investigation into SDVO. The AUSA notified Stanton that, because of that investigation, Stanton might have a conflict of interest in representing SDVO and Nunez in any criminal matters because of Stanton’s representation of Pena in the instant proceedings. In 3 Case: 11-50482 Document: 00512279158 Page: 4 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 response to this information, Stanton affiliated separate criminal defense counsel for SDVO and Nunez. During this same time, the government also filed a notice of its intention to use evidence of other crimes, wrongs, or acts for the instant proceedings, pursuant to Rule 404(b) of the Federal Rules of Evidence. Specifically, the government sought to adduce evidence that, in January 2010, Pena contacted a subcontractor on the Arizona project on behalf of SDVO to discuss a possible kickback of contract funds. In August 2010, a pretrial services officer sent the district court a memorandum advising that a recent FBI report contained allegations that, while out on bond, Pena had misappropriated the funds inadvertently deposited into the SDVO bank account. The court however took no action adverse to Pena as a result of this report. D. Plea Negotiations and the Court’s Reference to the “SDVO Matter” On December 1, 2010, the district court held a chambers conference with the attorneys, which the court neither recorded nor transcribed. At that conference, Stanton told the district court that Pena and the government were engaged in plea negotiations and that Stanton expected those negotiations would be successful. The district court’s response to this information is the focal point of this appeal. There are three different versions of the district court’s response. First, Stanton’s filing on the same day as the chambers conference suggests that the court said it wanted Pena to resolve the SDVO matter before the court would accept Pena’s plea. According to Stanton, the court told him that it had received information that money related to SDVO had been “missing and misapplied.” Second, the government recalls the district court saying that it would give Pena full credit for acceptance of responsibility if he resolved the SDVO matter concurrently with his guilty plea to the instant offenses. Third, at a hearing in 4 Case: 11-50482 Document: 00512279158 Page: 5 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 May 2011, the district court stated on the record that it recalled saying that the SDVO matter should be “resolved concurrently with the resolution of this case.” Likewise, the district court’s order following the hearing states: “At the conference the Court mentioned [the SDVO interpleader action] and stated its opinion that the civil case should be resolved by the time of the plea hearing [for the instant offenses].” Following the court’s statements, Stanton asked for the opportunity to respond to the allegations, but the court denied this request. E. Stanton’s Conflict-of-Interest Claim and Motion to Withdraw as Counsel On the same day as the chambers conference, Stanton notified Pena via email that he (Stanton) might have a non-waivable conflict in representing both Pena and SDVO. Pena responded that he could not allow Stanton, “under any circumstances,” to cease representing him in the SDVO matters. Pena then appears to have told Stanton that he would continue pro se in the instant criminal matters. Pena wrote that he would not sign the plea agreement unless it included the condition the district court had imposed and that he would request that the prosecutor enforce the condition. Later that day, Stanton filed a motion under seal notifying the district court of his conflict of interest and asking the court to vacate the trial date and permit him to withdraw from Pena’s case. Stanton reminded the court that he represented SDVO in the interpleader action regarding the same monies the court mentioned in chambers, which was pending in the same judge’s court. In addition, the Jeffrey Stone case was pending in Arizona, and that case also “involve[d] the construction project made the basis of the Government’s payment to SDVO.” Although Stanton had obtained separate counsel to represent SDVO and Nunez, he “continue[d] to be one of three lawyers representing SDVO in several [civil] matters.” Stanton reasoned that, because he continued to 5 Case: 11-50482 Document: 00512279158 Page: 6 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 represent SDVO and because the district court had ordered that the SDVO matter pending before it be resolved before it would accept Pena’s plea agreement, Stanton was ethically required to: 1) notify Nunez, SDVO, and Pena of his conflict of interest; 2) inform Nunez that he could not waive the conflict as it affected Pena; 3) withdraw from the SDVO litigation; and 4) withdraw from representing Pena. Stanton stated that, although he could not disclose the full extent of the conflict, he could not recommend that Pena accept terms that Stanton could not accomplish ethically and that were unenforceable. Stanton also told the district court that, in response to the chambers conference, Pena had directed him to remain as his counsel in the SDVO litigation, but that Stanton believed this request was against both Pena’s and Stanton’s interests. Stanton asked the court to: 1) vacate the trial date; 2) recuse itself or reassign the case; 3) permit Stanton to withdraw; 4) accept the plea based on the terms the parties had discussed prior to the chambers conference; and 5) not factor in the SDVO litigation for any sentencing matters. The district judge’s law clerk phoned the parties the next day, December 2, 2010. The law clerk told the parties that the court had changed its mind about the need to resolve the SDVO matter before the court would accept Pena’s plea and that the parties were to “disregard” its statement.2 F. Plea Agreements and Guilty Plea Hearing Four days later, on December 6, 2010, Pena signed plea agreements in both cases, admitting to the conspiracy charges in the first count of each indictment. The government agreed to ask that Pena not be sentenced until he 2 A minute entry on the docket reflects that the court denied Stanton’s motion to withdraw on December 3, 2010. However, the court’s sealed order dated May 18, 2011 notes that “the electronic file notation denying Stanton’s Motion to Withdraw . . . was not entered until May 11, 2011”–five months after Pena pleaded guilty. 6 Case: 11-50482 Document: 00512279158 Page: 7 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 had been fully debriefed so that the government might request a lower sentence under U.S.S.G. § 5K1.1 for substantial assistance. During the hearing, the district court followed the standard plea colloquy procedure under Rule 11. The court was also especially concerned about Pena’s “duty of financial candor,” which was a condition of his plea agreement: THE COURT: Mr. Pena, before I preliminarily accept your guilty plea, I need to direct your attention to the duty of financial candor section contained in both plea agreements in both of these cases. . . . I am going to instruct my probation officer within ten days of today to set up a meeting with you in which you are going to disclose the totality of your financial dealings, who have you given money to recently, say in the last year, that is out of the ordinary. Anything that that [sic] probation officer asks you about your finances, you are going to answer. Pena confirmed his understanding of these terms. The court subsequently accepted Pena’s guilty pleas and set sentencing for April 20, 2011. G. Pena’s Pro Se Activity Related to His Debriefings and Sentencing Prior to Pena’s sentencing, he engaged in significant pro se activity related to his debriefings with the government and his upcoming sentencing. For example, Pena, pro se, sent various communications to the probation officer, including:3 • In a letter to the probation officer dated February 2, 2011, Pena lodged legal challenges to the factual basis for his plea, arguing, inter alia, that the facts did not match the indictment. • In a February 11, 2011 letter to the probation officer, Pena expressed frustration that he had been unable to fully comply with his plea. He pointed to the plea 3 Pena later attached these letters as exhibits to his pro se motion to continue the sentencing and replace counsel, which he filed on April 15, 2011. 7 Case: 11-50482 Document: 00512279158 Page: 8 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 agreement’s “duty of financial candor” section to illustrate that he was attempting to comply with the district court’s demand that he resolve the SDVO matter. He wrote that he had insisted “the court’s request to ‘resolve the SDVO matter’. . . prior to having plead [sic], but my attorney and the AUSA refused to include the resolving of the SDVO matter in my plea.” Pena also referred to his debriefings, his duty of financial candor in his plea agreement, and the court’s request to resolve the SDVO matter, writing, “I WANT TO CONTINUE TO COMPLY!” • On March 14, 2011, Pena submitted “Self-Provided Presentencing Supporting Information” to assist the probation officer with composing his presentence investigation report (“PSR”). • Also on March 14, Pena wrote to the probation officer: “For the Record, I have provided ‘Substantial Assistance,’ but unfortunately without Counsel. I do not and never wish to have or be represented especially during any debriefings. In respecting the Court’s Demand to resolve certain matters, I have been without counsel and do not wish to ever waive this right.” In virtually all of his pro se communications, Pena indicated that he was without counsel and requested assistance from the probation officer. H. Pena’s Pro Se Conflict and Judicial Participation Claims, and Pena’s Request to Withdraw His Plea On April 15, 2011, Pena, pro se, filed a motion to continue sentencing and replace counsel, to which he attached copies of the above-referenced communications, in addition to others. In the documents, Pena asserted that the PSR that the probation officer had recently filed evidenced an ongoing conflict between Pena and Stanton. The PSR listed the SDVO matter under “Pending Charges.” The PSR also contained information that some of the SDVO monies 8 Case: 11-50482 Document: 00512279158 Page: 9 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 had been transferred to Stanton’s Interest on Lawyer’s Trust Account (“IOLTA”).4 Pena explained that these funds were the source of Stanton’s conflict of interest, both because Stanton was operating under a duty to protect the funds on behalf of SDVO in the civil suit and because there was an ongoing criminal investigation into these same funds which potentially implicated Stanton and his SDVO civil clients. Pena also pointed out that he had already begun extensive debriefings with the government in the hope of favorable treatment at sentencing, but that Stanton was not present at about 80 percent of those debriefings. According to Pena, Stanton did not attend the debriefings “due to the conflict with the court requested SDVO resolution.” He wrote: “Defendant’s Counsel cannot fight, rebut[ ] and/or respond to the prosecution [to reap the benefits [of] the 5K section and substantial assistance section] because of the inability to explain in detail to the court all of the information provided to the prosecution about SDVO by defendant.” In one of the attachments, Pena stated that Stanton “cannot effectively represent me when discussions ONLY about my old employer SDVO are taking place.” In its response to Pena’s motion, the government stated its belief that the fact that Pena continued with plea negotiations after the court withdrew the SDVO condition suggested that no harm had been done. The government maintained that the district court was under no obligation to investigate Stanton’s and Pena’s claims that Stanton was conflicted in the case because Pena had pointed to no actual conflict. According to the government, Stanton’s representation of SDVO did not render him conflicted in the matter of Pena’s 4 If a lawyer holds any funds which do not belong to the lawyer, then those funds must be held in a separate account designated as “trust” or “escrow,” which is the purpose of the IOLTA. See Tex. Disciplinary R. Prof’l Conduct 1.14(a). 9 Case: 11-50482 Document: 00512279158 Page: 10 Date Filed: 06/18/2013 No. 11-50482 cons. w/ 11-50484 debriefings because the government, not defense counsel, decides whether a defendant has debriefed truthfully and fully. In his reply to this motion, Pena requested to withdraw his guilty plea because he had pled on the advice of conflicted counsel. In this filing, he twice referred to the district court’s “inserting itself into plea negotiations” as the cause of the conflict. He wrote: “The court was knowingly aware of the potential conflict by motion, within 13 hours of defendant’s counsel’s known awareness that there was in fact a potential conflict made by the court inserting itself in the plea negotiations of December 1, 2010 and making its knowledge of the conflict known.” He also wrote: “On December 1, 2010 defendant’s counsel was made aware of the potential conflict by which the court inserted itself in the plea negotiations at the Chamber’s Conference held.” The government responded separately to Pena’s request to withdraw his pleas, arguing that, at the plea colloquy, Pena said he was pleading knowingly and voluntarily and that he was satisfied with his counsel: The government indicated its belief that the court had complied with Rule 11 during the colloquy. The government also noted that Pena had not asserted that he was not guilty of the charges.