U.S. GOVERNMENT BRIEF AGAINST WILLIAM GALLION’S APPLICATION FOR CERTIFICATE OF APPEALABILITY

CASE NO. 14-5763

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

WILLIAM J. GALLION PETITIONER-APPELLANT

V. RESPONSE OF UNITED STATES IN OPPOSITION

TO GALLION’S MOTION FOR CERTIFICATE OF APPEALABILITY

UNITED STATES OF AMERICA RESPONDENT-APPELLEE

* * * * *

The United States objects to William J. Gallion’s motion for a certificate of appealability because he has failed to make “a substantial showing of the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2). A certificate of appealability is a jurisdictional prerequisite to this Court’s review. Miller-El v. Cockrell, 537 U.S. 322, 336 (2003). To make “a substantial showing of the denial of a constitutional right,” Gallion must establish that “reasonable jurists could debate” whether “the petition should have been resolved [by the district court] in a different manner or that the issues presented were ‘adequate to deserve encouragement to proceed further.’” Slack v. McDaniel, 529 U.S. 473, 484 (2000) (quoting Barefoot v. Estelle, 463 U.S. 880, 893 n.4 (1983)).

Gallion was convicted at trial of conspiracy to commit wire fraud and wire fraud in violation of 18 U.S.C. §§ 1343 and 1349. [R. 599: Superseding Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 1

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Indictment at 10,837; R. 820: Verdict at 14,216.] The district court sentenced him to twenty-five years in prison and entered a restitution award of $127,678,834.05. [R. 955: Judgment at 16,696, 16,699.] This Court affirmed Gallion’s conviction. United States v. Cunningham, 679 F.3d 355 (6th Cir. 2012). The Supreme Court denied his petition for a writ of certiorari. Gallion v. United States, 133 S. Ct. 772 (2012).

Last year, Gallion filed a motion to vacate his sentence pursuant to 28 U.S.C. § 2255. [R. 1406: Motion to Vacate at 24,882.] He alleged that he was denied the effective assistance of trial counsel because (1) his counsel suffered from severe health conditions that prevented him from performing at a constitutionally effective level; (2) his counsel did not seek a continuance to retain an expert witness and did not hire Kenneth Feinberg as an expert witness; (3) his counsel permitted him to testify in his own defense; (4) his counsel failed to demand that the jury determine the amount of loss and the defendant’s role in the offense; and (5) his counsel failed to petition the Kentucky Supreme Court to inspect the Kentucky Bar Association’s (“KBA”) disciplinary files of three witnesses, Stanley Chesely, Joseph Bamberger, and David Helmers. [Id. at 24,897-98.] He further alleged his due process rights were violated denying him a fair trial (1) because the government allegedly failed to disclose impeachment Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 2

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materials from the KBA relating to Chesley, Bamberger, and Helmers, and (2) because Judge Reeves was allegedly biased against him and was believed to have engaged in an ex parte communication with counsel for the KBA’s Office of Bar Counsel. [Id. at 24,899-900.] The magistrate judge recommended denying of Gallion’s claims. [R. 1419: Report and Recommendation at 25,008.] Gallion filed objections to the report and recommendation as it related to the denial of his ineffective assistance of counsel claim relating to (1) his trial counsel’s health, (2) his trial counsel’s failure to secure an expert witness, and (3) his trial counsel’s failure to seek KBA investigatory records relating to Chesely, Bamberger, and Helmers. Gallion further objected to the magistrate’s findings he was not denied a fair trial relating to the alleged withholding of impeaching material by the government for Chesely, Bamberger, and Helmers, and the alleged judicial bias of Judge Reeves. [R. 1422: Objections at 25,030.]

Gallion also moved to recuse the trial judge, Danny C. Reeves, and to transfer the § 2255 motion to the Western District of Kentucky. Gallion’s motion included arguments already made and, in an effort to sidestep the one-year period of limitations of 28 U.S.C. § 2255(f), additional arguments that he failed to raise in his motion to vacate. [R. 1427: Motion to Recuse at 25,496.] Judge Reeves overruled Gallion’s objections and adopted the report and recommendation. The

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district court further found the motion to recuse to be out of time and alternatively without merit. The district court also denied Gallion a certificate of appealability. [R. 1433: Opinion and Order at 25,540.]

Gallion now seeks a certificate of appealability as it relates to his claims that (1) Judge Reeves was biased against him, (2) the government allegedly withheld exculpatory evidence, (3) the government allegedly knowingly used perjured testimony to convict, (4) Gallion was denied a fair trial, and (5) Gallion was denied effective assistance of counsel. See Gallion’s Motion at 19-44. Gallion fails to make a substantial showing of a denial of a constitutional right, even after giving his convoluted arguments their most expansive reading.*

Judge Reeves was not biased against Gallion

Gallion’s argument that Judge Reeves was biased against him fails because, as Judge Reeves properly recognized, Gallion’s motion for recusal was an attempt to argue matters that were not presented in his § 2255 petition and were outside the time restrictions for habeas petitions. See 28 U.S.C. § 2255(f). Judge Reeves properly found that the claim of judicial bias was not argued on direct appeal and,

*Throughout Gallion’s motion, he cites to the district court record using “D.E.” cites. Apparently, those cites relate to the appendix that he filed in district court with his notice of supplemental filing. [See R. 1424: Notice at 25,063-439.]

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therefore, were procedurally barred. [R. 1433: Opinion and Order at 25,544 (citing United States v. Frady, 456 U.S. 152, 168 (1982)).]

Regardless, Gallion’s allegations of judicial bias lack any basis. As Judge Reeves properly explained, the standards for judicial disqualifications are:

First, judicial rulings alone almost never constitute a valid basis for a bias or partiality motion. In and of themselves (i.e., apart from surrounding comments or accompanying opinion), they cannot possibly show reliance upon an extrajudicial source; and can only in the rarest circumstances evidence the degree of favoritism or antagonism required . . . when no extrajudicial source is involved. Almost invariably, they are proper grounds for appeal, not for recusal.

[R. 1433: Opinion and Order at 25,545 (quoting Liteky v. United States, 510 U.S. 540, 555 (1994)).] Gallion argues that bias is shown because of an alleged ex parte communication with Jane Graham, counsel for the KBA. He presumes that such a meeting took place for the improper purpose of limiting the availability of impeachment evidence for Chesley and Bamberger.

Gallion completely fails to advance any credible evidence that Judge Reeves engaged in an improper ex parte communication with Graham for any purpose. KBA Chief Bar Counsel, Linda Gosnell, testified at trial on February 24, 2009. [R. 1160: Linda Gosnell, TR (Vol. 6-A) at 20,460-87.] The billing records that Gallion submitted show that Gosnell’s counsel, Jane Graham, attended the trial on that day. [See R. 1406: Motion at 24,923.] During the morning, Graham filed Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 5

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a motion for a protective order and, outside the presence of the jury, argued that the court should prohibit any questioning of Gosnell about whether any attorneys, other than the defendants, were the subject of an investigation by the KBA Inquiry Commission. [R. 728: Motion at 11,500; see R. 1160: Colloquy, TR (Vol. 6-A) at 20,432-36.] After considering the parties’ positions, the court granted the motion based on the law. [R. 1160: Colloquy, TR (Vol. 6-A) at 20,436-40.]

Moments later, Gallion’s counsel, O. Hale Almand, Jr., addressed Judge Reeves:

MR. ALMAND: If it please the Court, I would just like to finish my record. I understand that the Court has ruled, but if I could just put this on the record.

The fact that one of the witnesses, Mr. Chesley, we know of the investigation on him because we have been contacted directly by the Bar asking us to provide information on him. So that is a matter that’s already been disclosed to us. So that’s no secret as far as that is concerned. So we are fully aware of that, which means that that being the case, we certainly as to him should have the ability to inquire into that.

And Judge, I would also ask, has there been – I’m not aware of how the courts work in Kentucky in regards to communication with judges by the Bar Association, and I didn’t know whether there had been any communications with the Court or not directly concerning this matter that we’re not aware of, but if there were, I would just ask that question. And I’m assuming there’s not, but I just ask.

THE COURT: You’ve asked the question.

MR. ALMAND: Yes, sir. Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 6

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THE COURT: It doesn’t mean I have to answer it.

[R. 1160: Colloquy, TR (Vol. 6-A) at 20,441-42.]

Almand’s questions to the court had nothing to do with Gosnell or Graham. Instead, Almand was attempting to find out if the KBA had contacted Judge Reeves for the purpose of obtaining information about Chesley. Thus, Gallion’s assertion that Graham had potentially made an ex-parte communication with the court relating to Gosnell and Graham’s motion for a protective order lacks any support in the record. Nevertheless, Gallion argues he is entitled to an evidentiary hearing for the purpose of questioning Graham. See Gallion’s Motion at 25-26. A hearing is not necessary, however, when a petitioner’s claims “‘cannot be accepted as true because they are contradicted by the record, inherently incredible, or [are] conclusions rather than statements of fact.’” Valentine v. United States, 488 F.3d 325, 333 (6th Cir. 2007) (quoting Arredondo v. United States, 178 F.3d 778, 782 (6th Cir. 1999)).

Gallion cannot show judicial bias merely because the district court granted Graham’s motion for a protective order. This Court upheld the ruling because disciplinary proceedings are confidential in Kentucky until there is a final determination that an ethical violation has occurred. Cunningham, 679 F.3d at 384 (citing Ky. Sup. Ct. R. 3.150(1)). Gallion has failed to show that this ruling is Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 7

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indicative of bias. See Caravalho v. Pugh, 177 F.3d 1177, 1179 (10th Cir. 1999) (mere disagreement with merits of court’s decision does not support recusal of judge). Because recusal was unnecessary and would have been a waste of valuable judicial resources, the district court properly denied Gallion’s motions to recuse and to transfer. [R. 1433: Opinion and Order at 25,544-46.]

The government did not withhold exculpatory evidence

Gallion’s claim that the government withheld exculpatory evidence from the KBA that he claims existed at the time of trial in files allegedly relating to the disbarment of Chesley, Bamberger, and Helmers also lacks any basis. Gallion claims that the government had this information because the Kentucky Supreme Court issued an order allowing the government access to the KBA files of defendants, Gallion, Cunningham, and Mills. See Gallion’s Motion at 26. Nothing in the record indicates that the government was provided with any other witness statements or any impeaching or exculpatory material by the KBA that was not provided as part of the files pertaining to Gallion, Cunningham, and Mills. The KBA provided information to the government only because the government successfully moved for an order to obtain the release of documents relating to the disciplinary case it had against Gallion, Mills, and Cunningham. [R. 1406: Motion, Exhibit B at 24,920-22.] The Kentucky Supreme Court rule allows for

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disclosure only where, as here, a law enforcement agency is conducting an investigation into a criminal matter relating to the target and the information is believed to be essential to that investigation. Ky. Sup. Ct. R. 3.150(4)(c).

For the first time, Gallion now accuses the government of failing to provide a summary of the interview of David Schaefer, an attorney for American Home Products, which Gallion alleges is exculpatory. See Gallion’s Motion at 27. Nowhere in his original § 2255 petition, his objections, or his motion to recuse does he mention Schaefer in the context of this argument. [See R. 1406: Motion at 24,882; R. 1422: Objections at 25,030; R. 1427: Motion to Recuse at 25,496.] Because he failed to raise this claim either on direct appeal or in his § 2255 motion, the Court should ignore his allegation. See Frady, 456 U.S. at 164 (holding that issues not raised on direct appeal are waived); Hewlett v. United States, No. 91-5832, 1991 WL 253308, at *1 (6th Cir. Nov. 26, 1991) (holding that claims not raised in prior § 2255 motion “not reviewable”).

Although Gallion does not explain when he received the Schaeffer interview summary, he claims that the use of the summary during the trial would have caused the jury to accept his advice-of-counsel defense. Gallion’s Motion at 27. But the portion of the interview upon which Gallion relies merely provides:

Schaefer recalled that during the mediation sessions (2001), there was talk by some of the plaintiffs’ attorneys, of the establishment of

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a charitable fund to receive any left over monies as part of the settlement. Although he could not remember exactly which attorneys participated in this discussion, Schaefer believed that Pierce Hamblin, David Helmers, Shirley Cunningham, William Gallion and Stanley Chesley were present, along with Schaefer’s two co-counsel.

[R. 1406: Motion, Exhibit A at 24,918-19.] Schaefer also stated that in his experience he had never heard of a charitable fund being established by plaintiffs’ attorneys. [Id. at 24,919.] Schaefer’s trial testimony does not contradict his interview summary statements. Schafer testified that although he was present at times during the mediation, he was not involved in the negotiations. [R. 1171: David Schaefer, TR (Vol. 16-A) at 21,421, 21,431.] At best, he recalled that Chesley, among others, were present. [Id. at 21,424-25.] Thus, Gallion’s claim that the interview “contradicts Judge Reeves[‘s] interpretation of the Settlement Documents and the ruling that denied the defense right to offer Expert Testimony,” Gallion’s Motion at 27, fails.

Much of Gallion’s argument is simply a rehashing of his complaints about legal rulings in the case. For example, he continues to attack Judge Reeves’s ruling that the case resulted in an aggregate settlement and repudiates this Court for upholding this ruling. See Cunningham, 679 F.3d at 376. He argues that Judge Reeves misinterpreted the settlement letter and nullified Gallion’s trial testimony that the limitation was on attorney’s fees citing to the affidavit of Kenneth Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 10

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Feinberg. In so doing, he improvidently ignores that Feinberg disavowed his earlier opinion once he acquired more details surrounding the defendants’ actions. See Ky. Bar Ass’n v. Chesley, 393 S.W.3d 584, 593 (Ky. 2013). Gallion could not show that Almand was deficient by failing to call an expert witness on an issue that was no longer before the jury. See Cunningham, 679 F.3d at 380 (noting that such an expert would be “irrelevant and confusing to the jury.”) Moreover, Gallion could not provide that he was prejudiced by the failure to retain an expert such as Feinberg. As the district court recognized, “it is highly likely that Feinberg’s testimony would have harmed Gallion’s case after he had been fully apprised of the circumstances surrounding the settlement. In short, there is no reasonable probability that, but for the decision not to call an expert such as Mr. Feinberg, the outcome of Gallion’s trial would have been different.” [R. 1433: Opinion and Order at 25,552.]

Gallion makes an impermissible argument regarding the district court’s ruling on the side letter relating to indemnification. He argues that the court wrongfully applied the parole evidence rule. Gallion’s Motion at 28. Gallion did not raise this argument on appeal. See Cunningham, 679 F.3d at 380. Further, nowhere in his motion to vacate or in his objections does he make this argument. Thus, this argument also cannot support a certificate of appealability. Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 11

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The government did not use perjured testimony to convict Gallion

Gallion’s argument that the government knowingly used perjured testimony to convict him, see Gallion’s Motion at 38, is yet another argument raised for the first time in his motion for a certificate of appealability. Again, such a claim cannot support a certificate of appealability. See Frady, 456 U.S. at 164 (holding that issues not raised on direct appeal are waived); Hewlett, 1991 WL 253308, at *1 (holding that claims not raised in prior § 2255 motion “not reviewable”). Gallion fails to support his claim that government presented perjured testimony.

The argument is based on a mishmash of conjecture and unsupported allegations of bad faith primarily directed at the government (1) because Chesley testified that he simply did not recall being at a meeting where attorney’s fees were discussed with Judge Bamberger, Gallion, and Cunningham, and (2) because Bamberger testified that Gallion told him that the claimants were thrilled to learn that a cy pres trust had been created. See Gallion’s Motion at 38-41. But the government presented the full testimony of Chesley and Bamberger, and the defendants thoroughly cross-examined these witnesses. [R. 998: Joseph Bamberger, TR (Vol. 14-B) at 17,369-408; R. 1175: Stanley Chesley, TR (Vol. 22-A) at 21,771-845.]

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Gallion was not denied a fair trial

To prevail on his claim, Gallion must demonstrate a constitutional error that was of such a magnitude that it had a substantial and injurious effect or influence on the jury’s verdict. Griffin v. United States, 330 F.3d 733, 736 (6th Cir. 2003) (citing Brecht v. Abrahamson, 507 U.S. 619, 637 (1993)). Gallion would be entitled to relief only by showing “a fundamental defect which inherently results in a complete miscarriage of justice.” Davis v. United States, 417 U.S. 333, 346 (1974). His argument that disbarment orders were admitted into evidence by the government, see Gallion’s motion at 42-43, cannot succeed because this Court rejected this argument on direct appeal. See Cunningham, 679 F.3d. at 383-84 (finding that any error would have been harmless in light of overwhelming and independently-supported evidence of guilty).

Gallion did not receive effective assistance of counsel

In his last argument, Gallion claims that his trial counsel’s poor health compromised his effectiveness in several respects. He alleges that his counsel was ineffective for not contacting Kenneth Feinberg as a replacement expert when his proposed expert, Richard Robbins, was not permitted to testify, or for failing to request a continuance to obtain another expert. He claims that his counsel was ineffective for acquiescing in the court’s suppression of the disciplinary files of

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Chesely, Bamberger, and Helmers. He further complains that he was wrongfully denied an evidentiary hearing on his ineffective assistance of counsel claim. Gallion’s Motion at 43-44. Again, each of Gallion’s arguments fail.

Prior to the second trial before Judge Reeves, Gallion’s counsel, O. Hale Almand, Jr., moved to withdraw due to conflicts in his schedule; however, Gallion opposed this request. Instead, Gallion personally asked for a two-week continuance to accommodate Almand’s schedule. [R. 694: Motion to Withdraw at 11,226; R. 695: Minute Entry at 11,251, R. 710: Colloquy, TR (Final Pretrial Conference) at 11,333-38.] The court later granted Gallion’s pro se motion for a continuance. [See R. 703: Order at 11,273.] Moreover, during the trial, Judge Reeves allowed several continuances to give Almand the opportunity to address medical issues relating to dizzy spells. [R. 1165: Court, TR (Vol. 10) at 20,975; R. 1166: Court, TR (Vol. 11) at 20,985; R. 1167: Court, TR (Vol. 12) at 20,989; R. 1002: Court, TR (Vol. 18-B) at 17,749-50.] Judge Reeves stated his concern about Almond’s health and not wanting to do anything to jeopardize it, and Almand expressed his appreciation to the court for the personal consideration he had been given. [R. 1167: Court, TR (Vol. 12) at 20,991, 20,994.]

Later, during the trial, Judge Reeves appointed Willis Coffey as stand-by counsel to consult with Gallion regarding the best manner to proceed in light of

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Almand’s illness. [R. 1173: Court, TR (Vol. 19) at 21,625.] During that consultation, Almand conversed intelligently about the case and stated that he wished to continue as Gallion’s counsel. Gallion agreed. Coffey requested a short continuance to give Gallion the opportunity to decide how he wished to proceed. [R. 1173: Colloquy, TR (Vol. 19) at 21,628.] This Court found no error with the procedure employed by the Judge Reeves. Cunningham, 679 F.3d at 385-86.

Judge Reeves recognized the high level of effectiveness that Almand provided despite his health issues:

THE COURT: To this point, Mr. Almand has provided very effective and very zealous advocacy on behalf of Mr. Gallion. I don’t think anyone could argue to the contrary on that, sir.

[THE GOVERNMENT]: We do not certainly disagree with that.

THE COURT: I want to make sure that he’s able to do that as the case proceeds. I don’t want Mr. Gallion to be prejudiced by a medical condition that obviously is not the choosing of Mr. Almand. It is what it is. We’re faced with the situation that we’re faced with.

[R. 1004: Colloquy, TR (Vol. 20-B) at 17,781].

Judge Reeves requested a medical opinion from Almand’s physician. Judge Reeves determined that the immediate concern was determining whether Almand was able to proceed “over the next ten days in representing Gallion and do so in an effective and zealous manner – not overly zealous, but in a zealous manner that’s Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 15

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expected of all attorneys.” [Id. at 17,782-83.] When trial resumed, Coffey announced that Almand was able to proceed.” [R. 1174: Colloquy, TR (Vol. 21-A) at 21,642.]

In his opinion denying Gallion’s § 2255 petition, Judge Reeves correctly stated:

The record establishes that Gallion was aware of Mr. Almand’s health problems but preferred that Almand continue as his attorney. The Court thoroughly considered Mr. Almand’s advocacy and granted several continuances to ensure that Almand could effectively represent Gallion. When appointed for this very purpose, Coffey agreed that Almand could competently represent Gallion. In short, Gallion has not shown that his counsel’s performance was deficient because of his health condition.

[R. 1433: Opinion and Order at 25,549.]

Even if Gallion could demonstrate that Almand’s representation fell below the standard of reasonableness, he cannot show that that he suffered any prejudice as required by Strickland v. Washington, 466 U.S. 668, 694 (1984). As previously explained, see supra, any failure to contact Feinberg did not prejudice Gallion, and Gallion was not entitled to the KBA disciplinary files of Chesely, Bamberger, and Helmers. Additionally, Gallion’s argument that Almand should have requested a continuance to obtain another expert is equally unfounded because Gallion cannot show that the testimony of such an expert would have affected the outcome of the trial in light of the overwhelming evidence of his guilt. Case: 14-5763 Document: 22 Filed: 12/18/2014 Page: 16

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Accordingly, this Court should deny Gallion’s motion for a certificate of appealability

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