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United States v. Levea

United States District Court, D. Nebraska

February 10, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
STELLA M. LEVEA and JAMES P. MASAT, Defendants.

MEMORANDUM AND ORDER

RICHARD G. KOPF, Senior District Judge.

Stella M. Levea (Levea) and James P. Masat (Masat) have filed Motions to Vacate under 28 U.S.C. § 2255. After initial review of the nearly identical motions, [1] I deny and dismiss them with prejudice. Briefly, my reasons for this decision are set forth below.

BACKGROUND

Together with a third defendant (Kenneth Mottin) who cooperated with the government, Levea and Masat were charged with numerous counts of fraudulent criminal conduct regarding First Americans Insurance Services (FAIS). FAIS sold insurance to Native American tribes.

To make a long and complex story short, Levea and Masat each entered guilty pleas to mail fraud. The maximum prison sentence authorized by law was 20 years in prison.

The fraud involved FAIS borrowing money from private individuals and securing the borrowed money with annuities to be purchased from the proceeds of the loans. FAIS was unable to repay the loans. It was then discovered that an insufficient number of annuities had been purchased thus causing massive losses. FAIS went into bankruptcy and was liquidated. Ultimately, and in addition to prison sentences of 97 months each, [2] I ordered both defendants to pay restitution exceeding $16 million. It is highly unlikely that the restitution obligation will ever be satisfied.

With the support of Gary Shovlain, one of the victims, Levea and Masat sought a probationary sentence so that the FAIS business model of selling insurance to Indian tribes could be used again by Levea and Masat. It was proposed that they would work under the direction of Shovlain, and in that way generate money to provide restitution to the victims.[3] At a sentencing hearing where evidence was taken, and as noted above, I rejected the request for probationary sentences and entered judgment against each defendant.[4] No appeal was taken.

At the sentencing hearing, the government provided several victim impact statements. Levea and Masat objected to the statements because they explicitly related to Mottin, who was the FAIS employee who dealt directly with most of the victims, rather than Levea and Masat, the owners and operators of FAIS. Moreover, not all victims were represented in the statements relied upon by the government. According to Levea and Masat, since the statements did not cover all the victims and since the statements related to Mottin, any victim's request that Mottin should go to prison had no bearing on whether Levea and Masat should be incarcerated. I overruled what was in essence a relevancy objection.

After the sentencing hearing and entry of judgment, Shovlain did his own survey. Based on that survey, he now asserts, in support of the § 2255 motions filed by the defendants, that out of 94 responses he received, 84 victims requested a sentence that did not involve a prison sentence for Levea and Masat in the hopes that the victims would be repaid if Levea, Masat and Shovlain could carry out their proposed business venture.

Each of the plea agreements that were signed by Levea and Masat contained broad appeal and postconviction waivers. That is:

Except as provided in Section I above, (if this is a conditional guilty plea) the defendant hereby knowingly and expressly waives any and all rights to appeal the defendant's conviction and sentence, including any restitution order in this case, including a waiver of all motions, defenses, and objections which the defendant could assert to the charges or to the Court's entry of Judgment against the defendant, and including review pursuant to 18 U.S.C. § 3742 of any sentence imposed.
The defendant further knowingly and expressly waives any and all rights to contest the defendant's conviction and sentence in any postconviction proceedings, including any proceedings under 28 U.S.C. § 2255, except:
(a) The right to timely challenge the defendant's conviction and the sentence of the Court should the Eighth Circuit Court of Appeals or the United States Supreme Court later find that the charge to which the defendant is agreeing to plead guilty fails to state a crime.
(b) The right to seek post conviction relief based on ineffective assistance of counsel, or prosecutorial misconduct, if the grounds for such claim could not be known by the defendant at the time the Defendant ...

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