United States of America v. McKye et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
BRIAN MCKYE, 	)
)
Petitioner, 	)
)
v. 	) 	Case No. CR-11-45-R
) 	CIV-17-328-R
)
UNITED STATES OF AMERICA, 	)
)
Respondent. 	)
ORDER
Before the Court is Defendant-Petitioner Brian McKye’s Motion to Vacate, Set
Aside, or Correct Sentence under 28 U.S.C. § 2255. Doc. 1 (Civil) and Doc. 313 (Criminal).
For following reasons, his Motion is DENIED.
In February 2011, a federal grand jury sitting in the Western District of Oklahoma
returned an indictment charging Brian McKye with eight counts of securities fraud, in
violation of 15 U.S.C. § 78j(b), and one count of conspiracy to commit money laundering,
in violation of 18 U.S.C. § 1956(h). A jury found McKye guilty on all charges save one
count of security fraud. The Tenth Circuit reversed Mr. McKye’s conviction, however,
finding that the Court, rather than instructing the jury that the term “security” includes a
“note,” should have let the jury decide whether the investment notes Mr. McKye marketed
qualified as securities. United States v. McKye, 734 F.3d 1104, 1105 (10th Cir. 2013). The
Tenth Circuit then remanded the case for a retrial.
Following remand, Mr. McKye’s attorney and Mr. McKye both moved to sever their
attorney-client 	relationship. 	The 	Court 	allowed 	counsel 	to 	withdraw, 	and 	after 	an
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examination on the record, permitted Mr. McKye to proceed to trial pro se but also
appointed standby counsel to assist Mr. McKye. At his retrial, the jury found Mr. McKye
guilty on all counts except the security-fraud count on which he was previously acquitted.
Mr. McKye appealed his conviction, and the Tenth Circuit affirmed. United States v.
McKye, 638 F.Appx. 680, 681 (10th Cir. 2015), cert denied, 136 S.Ct. 2522 (2016).
Mr. McKye now moves to vacate his sentence under 28 U.S.C. § 2255, arguing that
he is being held in violation of the Constitution and the laws of the United States. “To
obtain collateral relief [Mr. McKye] must clear a significantly higher hurdle than would
exist on direct appeal.” United States v. Frady, 456 U.S. 152, 166 (1982). He must allege
a violation of federal law constituting a “fundamental defect which inherently results in a
complete miscarriage of justice or an omission inconsistent with the rudimentary demands
of fair procedure.” United States v. Gordon, 172 F.3d 753, 755 (10th Cir. 1999). “[T]he
petitioner bears the burden of alleging facts which, if proved, would entitle him to relief.”
Hatch v. Oklahoma, 58 F.3d 1447, 1457 (10th Cir. 1995).
Mr. McKye advances several bases for relief. Though the Court has liberally
construed his pro se arguments pursuant to Haines v. Kerner, 404 U.S. 519 (1972), none
entitles him to relief. The Court has divided his arguments into seven categories.
Before proceeding, the Court acknowledges that while Mr. McKye devotes nearly
his entire brief to describing why legal errors contaminated his trial, he does make a
singular reference to his appellate counsel’s general failure to raise his brief’s arguments
on appeal. Counsel did raise one of the following issues (the hearsay issue) on direct appeal,
however. As for the arguments not raised on direct appeal, Mr. McKye has not proved that
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his counsel was ineffective in failing to raise them. To prevail on a claim for ineffective
assistance of appellate counsel, Mr. McKye “must show a reasonable probability that, but
for his counsel's unreasonable failure to” raise a particular nonfrivolous issue, “he would
have prevailed on his appeal.” Milton v. Miller, 744 F.3d 660, 669 (10th Cir. 2014). And
as the Court explains below, any issues that appellate counsel could have raised would have
been meritless and thus would not have entitled Mr. McKye to relief.
The Admission of Hearsay Testimony from Agent Labarthe
A central question at Mr. McKye’s trial was whether the investment notes that
McKye marketed and sold were securities under the federal securities fraud statute. Mr.
McKye contends that the Court erred when it admitted testimony from Agent Labarthe, of
the 	Oklahoma 	Department 	of 	Securities, 	who 	investigated 	Mr. 	McKye’s 	business
activities. During cross-examination the Government questioned LaBarthe about the
outcome of a state civil action filed against Mr. McKye and his companies as a result of
her agency’s investigation. (The same investment notes were at issue in both the civil action
and Mr. McKye’s federal criminal trial.) Agent LaBarthe testified in the criminal trial that
the state court previously held that the investment notes were securities.
Mr. McKye argues this was inadmissible hearsay. Mr. McKye, however, already
raised this issue on appeal, and the Tenth Circuit summarily rejected it, finding that the
introduction of the testimony was harmless. McKye, 638 Fed.Appx. at 682. “Absent an
intervening change in the law of a circuit, issues disposed of on direct appeal generally will
not be considered on a collateral attack by a motion pursuant to § 2255.” United States v.
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Prichard, 875 F.2d 789, 791 (10th Cir. 1989). The Tenth Circuit disposed of this argument,
and Mr. McKye cannot now relitigate it via collateral attack.
Before proceeding to Mr. McKye’s remaining arguments, the Court acknowledges
that, in contrast to this hearsay issue, Mr. McKye failed to raise his remaining arguments
on direct appeal. Generally, “Section 2255 is not available to test the legality of matters
which should have been raised on appeal.” United States v. Walling, 982 F.2d 447, 448
(10th Cir. 1992) (alteration omitted). The exception is where a defendant “can show cause
excusing his procedural default and actual prejudice resulting from the errors of which he
complains, or can show that a fundamental miscarriage of justice will occur if his claim is
not addressed.” United States v. Cook, 997 F.2d 1312, 1320 (10th Cir. 1993). There is no
exhaustive list of acceptable causes for failing to raise an argument on appeal. But “the
existence of a cause of a procedural default must ordinarily turn on whether the prisoner
can show that some objective factor external to the defense impeded counsel’s efforts to”
raise the issue. Murray v. Carrier, 477 U.S. 478, 488 (1986). Examples can include when
a factual or legal basis for a claim was not available to counsel or when interference by
officials made raising the issue impracticable. Id. The miscarriage-of-justice exception, on
the other hand, is a “markedly narrow one, implicated only in extraordinary cases where a
constitutional violation has probably resulted in the conviction of one who is actually
innocent.” Magar v. Parker, 490 F.3d 816, 820 (10th Cir. 2007) (alterations omitted).
So to sum, Mr. McKye failed to raise the following arguments on appeal. But even
if he had, the Court would deny relief because has not shown the requisite prejudice and a
valid reason for failing to address the arguments on appeal.
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Violations of the Speedy Trial Act
Mr. McKye argues the Court violated his rights under the Speedy Trial Act, 18
U.S.C. § 3161(c)(2), in two ways.
First, he contends that his retrial commenced too long after the Tenth Circuit
reversed his original conviction. He points to § 3161(e), which requires that in the event a
defendant is retried after an appeal, “the trial shall commence within seventy days from the
date the action occasioning the retrial becomes final . . . .” The problem is that his trial did
commence within the provision’s 70-day window. “[T]he date the action occasioning the
retrial” became final was September 11, 2013, when the Tenth Circuit issued its mandate.
See, e.g., United States v. Scalf, 760 F.2d 1057, 1059 (10th Cir. 1985) (holding that §
3161(e)’s time period begins running when the Tenth Circuit issues its mandate, not when
it reverses a conviction). Mr. McKye’s retrial commenced 68 days later, on November 18,
2013.
His second argument involving the Speedy Trial Act relies on the Act’s requirement
of a 30-day preparation period under § 3161(c)(2). That provision precludes a trial from
“commenc[ing] less than thirty days from the date on which the defendant first appears
through counsel or expressly waives counsel and elects to proceed pro se.” Ostensibly, this
provision would not apply to Mr. McKye. He first appeared with counsel at his arraignment
on February 2, 2011. His retrial was more than two and a half years later, on November 18,
2013. Mr. McKye seems to argue that because his first appearance after the Tenth Circuit
issued its mandate was on October 24, 2013, the Court violated § 3161(c)’s 30-day
preparation period when it commenced McKye’s new trial on November 18, 2013.
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Mr. McKye has not offered and the Court is yet to find any authority holding that
he was entitled to a new 30-day preparation period starting upon his first appearance
following the Tenth Circuit’s remand. He cites the Ninth Circuit’s observation that “[w]hen
an indictment is dismissed on motion of the defendant, and the defendant is thereafter
reindicted, both the 30–day trial preparation period and the 70–day speedy trial time period
start over.” United States v. Karsseboom, 881 F.2d 604, 606 (9th Cir. 1989). Those are not
the facts here. The Government retried Mr. McKye following reversal. It did not reindict
him following dismissal.
Mr. McKye’s claim is meritless because the Act’s 30-day preparation period is
typically satisfied when a defendant’s counsel has 30 days to prepare for the original trial.
For instance, so long as a defendant’s original counsel has 30 days to prepare for trial,
commencing the trial less than 30 days after defendant changes counsel does not violate
the Speedy Trial Act. See, e.g., U.S. v. Jackson, 50 F.3d 1335, 1339 (5th Cir. 1995). The
same rationale applies for superseding indictments. A defendant is not entitled to a new
30-day window merely because the grand jury returns a superseding incitement. See United
States v. Richardson, 537 F.3d 951, 958–59 (8th Cir. 2008); also see United States v. Rojas-
Contreras, 474 U.S. 231, 236 (1985) (holding 30-day preparation period was satisfied
where a superseding indictment had been filed one day before trial since defendant’s trial
was not commenced until more than two months after his first appearance through
counsel). And even when an indictment is dismissed and reinstated following an appeal,
the Speedy Trial Act does not automatically confer a new 30-day preparation period on a
defendant. See, e.g., United States v. Maybusher, 735 F.2d 366, 369 (9th Cir. 1984).
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Nothing persuades the Court that the Speedy Trial Act should have afforded Mr.
McKye a new 30-day preparation period following the Tenth Circuit’s remand. The “sole
purpose” of the Act’s 30-day preparation period is “to ensure that the ends of justice are
protected by providing defendants adequate trial preparation time.” United States v.
Watkins, 811 F.2d 1408, 1411 (11th Cir. 1987). Finding that the Government retried Mr.
McKye too soon hardly seems to accord with the ends of justice: it was Mr. McKye—not
the Government—that insisted on quickly commencing a new trial. See Doc. 144
(“Defendant herby humbly asks this Court to expedite further remanded proceedings with
all possible haste according to the statutory parameters of the Speedy Trial Act.”). In short,
there was no violation of the Speedy Trial Act, and habeas relief on that ground is therefore
inappropriate.
Errors Related to the Indictment
Mr. McKye also raises several claims relating to his indictment. He first complains
that he failed to timely receive a copy of the indictment before his retrial. Again, it is
unclear how he suffered prejudice. The Government retried him on the same counts alleged
in the initial indictment, save for the one count on which he was acquitted. After Mr.
McKye informed the Court that he did not have a copy of this “new” indictment at a hearing
on October 24, 2013, he received a copy of it on October 30, 2013. And as the Court noted
at this October 30 hearing, Mr. McKye already possessed the original indictment.
His next complaint relating to the indictment is that the Government failed to
identify key elements of his charged offenses. This, though, does not give rise to relief.
“[T]he sufficiency of [an] indictment or information is not subject to collateral attack by
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habeas corpus or motion under 2255.” Payton v. United States, 436 F.2d 575, 577 (10th
Cir. 1970). Yet even if it were, Mr. McKye could not show prejudice. His theory is that he
was unaware the Government would attempt to prove that the notes he marketed qualified
as an investment contract, and therefore a security. But as the Tenth Circuit recognized
when it affirmed his conviction, in order to prove his fraud involved securities, the
Government put on “strong evidence that the investment notes were securities under both
the investment contract theory and the note theory.” McKye, 638 F.App’x at 684 (10th Cir.
2015). Put differently, even if the Government had not proved that the investment notes
qualified as an “investment contract” under the federal law defining “security,” 15 U.S.C.
§ 77b(a)(1), it still would have prevailed by proving that the investment notes were
securities under the statute. Any failure of the indictment to apprise Mr. McKye that the
Government would proceed under an investment-contract theory was thus harmless.
Denial of the Right to Counsel
Mr. McKye has essentially three complaints about his trial counsel, or lack thereof.
His first is that the Court improperly denied his request to appoint someone other than his
two previous court-appointed attorneys that he had fired. In a lengthy exchange at the
October 30, 2013 hearing, the Court explained that Mr. McKye had a choice: proceed pro
se or accept the reappointment of one of the attorneys whom he had previously fired. Mr.
McKye opted to proceed pro se. As he informed the Court, he would rather quickly go to
trial than have counsel who would request additional time to prepare. He made this decision
in spite of the Court’s warnings about proceeding pro se in a complex case steeped in
securities law. See Doc. 300.
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In other words, Mr. McKye had numerous opportunities to obtain counsel but chose
not to. “An indigent defendant must be provided with appointed counsel at state expense.
But an indigent defendant does not have a right to choose appointed counsel.” United States
v. Nichols, 841 F.2d 1485, 1504–1505 (10th Cir. 1988). That Mr. McKye did not prefer
either of his Court-appointed attorneys does not mean he was deprived of representation.
Mr. McKye’s repeated refusals to accept counsel is also why the Court cannot
accept his second argument that his waiver of counsel and decision to proceed pro se was
involuntary 	because 	he 	did 	not 	understand 	he 	would 	have 	to 	defend 	against 	the
Government’s theory that his investment notes qualified as an “investment contract” under
the federal securities statute. Again, the Court emphasized the numerous benefits to
accepting counsel and the dangers of proceeding pro se. He cannot now argue that he was
unaware he would have to defend himself on charges, especially when those charges were
the identical ones he faced in his first trial.
Mr. McKye’s third argument relating to his representation is that the Court
impermissibly hampered his defense by denying him personal access to a law library. But
Mr. McKye can hardly claim he was prejudiced by lack of access to a law library. The
Court provided him with standby counsel, a proper substitute for library access. See, e.g.,
United States v. Taylor, 183 F.3d 1199, 1204 (10th Cir. 1999) (“It is well established that
providing legal counsel is a constitutionally acceptable alternative to a prisoner’s demand
to access a law library.”). Habeas relief on this ground is consequently inappropriate.
Finally, Mr. McKye insists his appellate counsel poorly framed his hearsay
argument in his brief and failed to argue that Mr. McKye’s carrying $2 million in insurance
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coverage demonstrated he meant to protect his investors. To prove ineffective appellate
counsel, “defendant must show that his counsel’s performance fell below an objective
standard of reasonableness, and that the deficient performance resulted in prejudice.”
United States v. Brinson, 652 F.Appx. 705, 707–708 (10th Cir. 2016) (citing Strickland v.
Washington, 466 U.S. 668 (1984)). Mr. McKye’s appellate counsel, though, was not
required to raise every possible issue on appeal. Rather, “[t]he weeding out of weak claims
to be raised on appeal is the hallmark of effective advocacy, because every weak issue in
an appellate brief or argument detracts from the attention a judge can devote to the stronger
issues, and reduces appellate counsel’s credibility before the court.” Scott v. Mullin, 303
F.3d 1222, 1230 n.4 (10th Cir. 2004). Mr. McKye has failed to show how his appellate
counsel’s representation was in any way objectively unreasonable.
Prejudicial Remarks and Evidence by the Government
Mr. McKye’s fifth ground for habeas relief concerns the Government’s reference to
his “Ponzi Scheme” and him as a “pay day lender.” He also objects to the Government’s
references to his “real estate” sales and rentals, its alleged use of “investment note” and
“investment contract” interchangeably, and the introduction of expert testimony, which he
says the Government inappropriately characterized as lay testimony. All of this, he insists,
unfairly prejudiced the trial.
His arguments are best construed as Due Process challenges, which means that to
prevail he must show that the remarks were “so unduly prejudicial that it render[ed] the
trial fundamentally unfair.” Holland v. Allbaugh, 824 F.3d 1222, 1228 (10th Cir. 2016).
That said, relief is not appropriate “where substantial evidence supported the jury’s
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verdict.” Id. Again, the Tenth Circuit found strong evidence supporting his conviction. See
McKye, 638 Fed.Appx. at 684 (concluding there was “strong evidence that the investment
notes were securities under both the investment contract theory and the note theory). Relief
on this ground is thus inappropriate. His arguments also seem to suggest that this evidence
was so prejudicial that the jury erred in finding that the evidence actually supported a
conviction. That argument, however, is not available under § 2255. A prisoner may not use
§ 2255 as a vehicle to challenge the sufficiency of the evidence used to convict him. Payton
v. United States, 436 F.2d 575, 577 (10th Cir. 1970); United States v. Aragon-Pando, 986
F.2d 1430, 1993 WL 18530, *1 (10th Cir. 1993).
Erroneous Jury Instruction
Mr. McKye also objects to the Court’s jury instruction describing what constitutes
a “security.” The Court instructed the jury that in deciding whether a note bears a family
resemblance to notes that are not considered securities under federal law, jurors should
consider, among other things, the existence of risk-reducing factors:
If no factor exists that reduces the risk of the note, such as the
existence of another regulatory scheme outside of the securities
laws, collateral, or insurance, then the note tends to be a
security. However, if such a risk-reducing factor does exist,
then the note is less sensibly viewed as a security.
Doc. 188, at 37.
Mr. McKye’s theory on how this instruction confused the jury is not entirely clear,
but he appears to be arguing that the instruction did not clearly explain the effect of carrying
insurance on whether a note qualifies as a security. He seems to contend that the instruction
caused jurors to believe that “collateral, or insurance” “tends to be a security”—thereby
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convincing jurors that because he carried an insurance policy on the investment note or
notes, they were securities as a matter of law. Even if this were a sensible reading of the
jury instruction, which the Court does not believe it is, Mr. McKye still cannot clear the
high burden required to obtain habeas relief. 	“Unless the constitution mandates a jury
instruction be given, a habeas petitioner must show that, in the context of the entire trial,
the error in the instruction was so fundamentally unfair as to deny the petitioner due
process.” Young v. Attorney Gen. for New Mexico, 534 F. App'x 707, 710–11 (10th Cir.
2013). Again, Mr. McKye has not and cannot make this showing. “[A] misstatement of an
element in jury instructions is subject to harmless error analysis on habeas review.”
Scoggin v. Kaiser, 186 F.3d 1203, 1207 (10th Cir. 1999). This instruction, even if it was
error, was necessarily harmless; the Tenth Circuit found there was sufficient evidence to
support his conviction under either the investment-contract theory or a note theory. McKye,
638 Fed.Appx. at 684.
Cumulative Error
Mr. McKye’s last argument is that cumulative error justifies relief. But the Court
cannot find cumulative error where there is no error to begin with. United States v. Rivera,
900 F.2d 1462, 1471 (10th Cir. 1990).
Conclusion
The Court denies Petitioner a Certificate of Appealability (COA) under Rule 11(a)
of the Rules Governing Section 2255 Cases in the United States District Courts. When a
court denies a habeas petition on the merits, a petitioner is entitled to a COA only if he
demonstrates “that jurists of reason could disagree with the district court’s resolution of his
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constitutional claims or that jurists could conclude the issues presented are adequate to
deserve encouragement to proceed further.” Miller-El v. Cockrell, 537 U.S. 322, 327, 123
S.Ct. 1029 (2003). In contrast, where a habeas petition is denied on procedural grounds, a
petitioner is entitled to a COA only if he demonstrates that “jurists of reason would find it
debatable whether the petition states a valid claim of the denial of a constitutional right and
that jurists of reason would find it debatable whether the district court was correct in its
procedural ruling.” 	Stack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d
542 (2000). Mr. McKye has made neither showing and is thus not entitled to a COA. He
may seek a certificate from the court of appeals under Federal Rule of Appellate Procedure
22 if he wishes to appeal the Court’s ruling on his motion.
In conclusion, Petitioner’s motion under 28 U.S.C. § 2255 is DENIED and
DISMISSED WITH PREJUDICE because it lacks merit.
IT IS SO ORDERED this 31 st day of July 2017.
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