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Knox v. Quintana

United States District Court, Sixth Circuit

October 23, 2013

GARY L. KNOX, Petitioner,
FRANCISCO QUINTANA, Warden, Respondent.


KAREN K. CALDWELL, District Judge.

Gary L. Knox is an inmate confined in the Federal Medical Center located in Lexington, Kentucky. Proceeding without an attorney, Knox has filed a petition for a writ of habeas corpus, pursuant to 28 U.S.C. § 2241, challenging his federal conviction and sentence. [R. 1] Knox has paid the $5.00 filing fee. [R. 3]

The Court conducts an initial review of habeas corpus petitions. 28 U.S.C. § 2243; Alexander v. Northern Bureau of Prisons, 419 F.Appx. 544, 545 (6th Cir. 2011). The Court must deny the petition "if it plainly appears from the petition and any attached exhibits that the petitioner is not entitled to relied." Rule 4 of the Rules Governing § 2254 Cases in the United States District Courts (applicable to § 2241 petitions under Rule 1(b)). The Court evaluates Knox's petition under a more lenient standard because he is not represented by an attorney. Erickson v. Pardus, 551 U.S. 89, 94 (2007); Burton v. Jones, 321 F.3d 569, 573 (6th Cir. 2003). At this stage, the Court accepts Knox's factual allegations as true, and construes his legal claims in his favor. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Having reviewed the petition, the Court must deny it because Knox can not pursue his claims in a habeas corpus proceeding under § 2241.[1] motion for a status report


On August 5, 2005, a federal grand jury in handed down a 42-page, factually detailed, eleven-count superseding indictment charging Knox with three counts of bank fraud, in violation of 18 U.S.C. § 1344, one count of wire fraud, in violation of 18 U.S.C. § 1343, six counts of mail fraud, in violation of 18 U.S.C. § 1341, and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). United States v. Knox, No. 05-CR-20029 (C.D. Ill. 2005) The superseding indictment alleged that Knox and others devised a scheme to defraud that began in 1999 and continued into 2005 and involved more than 150 fraudulent real estate transactions, totaling more than $8 million, with the defendants receiving at least $3 million in proceeds from the fraudulent scheme.

On April 19, 2006, Knox pleaded guilty to all eleven counts of the superseding indictment. In April 2007, one year after he pleaded guilty but almost a year before he was sentenced, Knox filed motions to withdraw his guilty plea and to dismiss the indictment, both of which the district court denied. [R. 80, therein; see also United States v. Knox, No. 05-CR-20029, 2007 WL 1591871 (C.D. Ill. May 31, 2007)]

On March 7, 2008, over Knox's objections, the district court applied several sentencing enhancements, including enhancements for using sophisticated means, having ten or more victims, gaining $1 million or more in gross receipts from a financial institution, and assuming an organizer role in a scheme involving five or more participants, and sentenced Knox to a 235-month prison term and 5-year term of supervised release on each count, to be served concurrently. [R. 92, therein] Knox appealed, challenging numerous aspects of his enhanced sentence, but the Seventh Circuit Court of Appeals affirmed, finding that the district court had properly applied various two and four-level enhancements to his sentence, and that Knox had waived his challenge to the 18-level increase to his base offense level for a loss greater than $2.5 million. United States v. Knox, 624 F.3d 865 (7th Cir. 2010).

On July 20, 2011, Knox filed a motion under 28 U.S.C. 2255 and numerous supplemental filings seeking relief from his sentence. Knox v. United States, No. 2:11-CV-02179-MPM-DGB (C. D. Ill., 2011) [R. 1-11, therein] Knox claimed that in numerous instances during his criminal proceeding, he had received ineffective assistance of counsel; that he was actually innocent of the conspiracy to commit money laundering charge; and that his counsel was ineffective for allowing him to plead guilty to that offense. Knox cited United States v. Santos, 553 U.S. 507 (2008), as authority for his argument that he is actually innocent of the money laundering conspiracy offense.

In Santos, the Supreme Court concluded that the term "proceeds" in as used in the money laundering statute (18 U.S.C. § 1956(a)(1)(A)(I)) was ambiguous, and that when applying the rule of lenity, the term "proceeds, " as used in 18 U.S.C. § 1956, generally means "profits" and not "gross receipts." Id. at 514. However, Justice Stevens' concurring opinion in the plurality decision indicates that this may not always be so, and that each offense must be examined to determine whether the defendant used the funds generated in the underlying predicate criminal activity in such a way as to run afoul of the separate prohibition against money laundering. Santos, 553 U.S. at 525-29 (Stevens, J., concurring).

Applying both Santos and more recent Seventh Circuit law, which holds that the money laundering statute prohibits both the concealment of net proceeds and the reinvestment of net proceeds to promote the illicit activity, the district court concluded that Knox failed to assert a legitimate argument based on Santos. See Knox, No. 2:11-CV-02179-MPM-DGB (C.D. Ill. Feb. 27, 2012) [R. 22, p. 21 therein (citing United States v. Aslan, 644 F.3d 536, 547 (7th Cir. 2011)] The district court explained its rejection of Knox's Santos claim as follows:

In this case, Petitioner [Knox] admitted to this court that he and Ciota engaged in financial transactions and converted the "profits from the fraudulent sales to their personal use" and "to promote the ongoing fraudulent scheme." Therefore, there can be no question that there were profits (net proceeds) from the fraudulent scheme which Petitioner converted and used for personal expenses and used to promote the illicit activity. Petitioner's conviction is perfectly proper under Santos. [citation omitted]
Petitioner has argued, at length, that this conclusion is wrong because the money used for down payments to promote the ongoing fraudulent scheme cannot be considered "profits." This court disagrees because this use of the net proceeds to promote the illicit activity did, in fact, violate the money laundering statute. See Aslan, 644 F.3d at 547. This court concludes that Petitioner is not "actually innocent" of money laundering. Because this court has concluded that Petitioner was properly convicted of money laundering under Santos, Petitioner's argument that his trial counsel was ineffective for allowing him to plead guilty to the money laundering offense is without merit.

[ Id., pp. 21-22 (emphasis added)]

The district court further concluded that Knox had not been denied effective assistance of counsel in any respect. Knox appealed, but on August 27, 2012, the Seventh Circuit denied Knox a certificate of appealability, finding "... no substantial showing of the denial of a constitutional right." [ Id., R. 35, therein; Knox v. United States, No. 12-1575 (7th Cir. Aug. 27, 2012)]. Knox thereafter filed a motion under Federal Rule of Civil Procedure 60(b) seeking relief from the order ...

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