Drayer v. United States

Citations: 50 F. Supp. 3d 382; 2014 WL 4960793Docket: No. 11-CV-753 ADS

Court: District Court, E.D. New York; October 3, 2014; Federal District Court

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On February 11, 2011, Barry Drayer filed a pro se petition for a writ of habeas corpus under 28 U.S.C. § 2255, asserting ineffective assistance of trial and appellate counsel. Drayer is currently serving a 138-month sentence followed by three years of supervised release. He has also submitted two letter motions for discovery and to amend his petition, both of which were denied.

The background reveals that from 1991 to mid-2002, Drayer orchestrated a fraud scheme through RW Professional Leasing Services, Inc. (PLS), which he controlled. PLS provided financial services to medical professionals seeking to purchase equipment or secure funding for their practices, operating offices in Island Park, New York, and Massachusetts. Drayer managed the Massachusetts office and held titles including Vice-President and Director, although he referred to himself as CEO. PLS functioned as a financing broker, facilitating loans from various financial institutions rather than originating them.

PLS engaged in three primary transaction types: equipment leasing, sale-leaseback agreements, and unsecured working capital loans. It maintained relationships with federally-insured community banks and non-bank lenders, which provided capital either directly or via loans to PLS for lease transactions. The agreements typically required PLS to service the loans, manage prepayments, and handle defaults or bankruptcies by remitting proceeds or substituting leases. Non-bank lenders such as First Sierra and AT&T Capital used a "lock-box" system to receive payments from doctors, which were then forwarded to their control.

If a doctor's payment was delayed, PLS was tasked with collecting from the doctor. In cases of borrower default, PLS had to pay the full loan amount to the lender. Should a doctor declare bankruptcy, PLS was obligated to inform the lender and either pay off the loan or finance a new loan, assigning the payment stream to the lender. Under the Petitioner’s direction, PLS executed multiple fraudulent schemes to deceive funding institutions by hiding details about collateral, loan proceeds, and payment distributions. Key schemes included the use of forged financial instruments, the "Mailbox Etc." and "Pay Ahead" schemes, multiple lending schemes, the creation of sham companies like Riteway and GHT, the HSMT scheme, the Carefree and MedPro conspiracy, and the concealment of records from auditors. The Petitioner profited millions in commissions, while lenders suffered losses totaling tens of millions. The scheme unraveled in 2002 when the Petitioner and co-defendants were arrested.

One prominent scheme involved using forged financial instruments to mislead lenders into accepting payments from PLS on behalf of borrowers. PLS used a "lock-box" system requiring borrowers to send payments directly to the bank; however, PLS occasionally made payments on borrowers' behalf, needing proof of actual payment. To meet this requirement, PLS created altered or forged financial documents to misrepresent that payments had been made, preventing lenders from realizing that borrowers had stopped paying. Evidence against PLS included testimony from employees who engaged in forgery, such as Frank Zambaras, who altered checks digitally at the request of Roger Drayer. Zambaras explained that these alterations were justified since the checks were not meant for actual payment but to falsely demonstrate payment. When Zambaras stopped forging checks, he taught Roger Drayer how to alter checks using computer software. Additionally, PLS produced phony telechecks as proof of payment, with Jennifer Tarantino, the Petitioner’s niece, testifying to her role in generating 1,000 to 1,500 of these documents over two years, following the Petitioner’s directives.

Adam Drayer and employee Frank Zambaras admitted to creating fraudulent Western Union receipts under the direction of the Petitioner to mislead banks into believing payments had been made to PLS by a doctor. Roger Drayer recounted a specific instance where the Petitioner instructed him to alter an existing check's date, number, or amount, not to cash it but to use it as proof of payment.

The "Mailbox Etc." and "Pay Ahead" scheme involved using accounts at Mailbox Etc. to intercept invoices intended for PLS borrowers, particularly those who had declared bankruptcy or prepaid loans. Instead of notifying banks about these bankruptcies or remitting prepayments, PLS retained the funds for operational expenses and to cover defaulted loans. Lynn Walker, a former PLS employee, testified that she was directed not to record large checks received for the First Sierra account and instead send them to the PLS New York office. When doctors attempted to prepay loans, she was instructed to redirect their checks to the PLS Massachusetts office.

To conceal the scheme, PLS submitted change of address forms to redirect borrowers' mail to Mailboxes Etc., preventing them from knowing their loans were unpaid. PLS continued to make timely payments to banks by using the falsified payment instruments. Besser, an employee, noted that the Crawford & Sons pension plan invested in PLS loans and became aware of PLS's failure to remit over $300,000 from a prepayment on a loan to Dr. Ojeager. Besser also created a summary chart revealing multiple bankruptcies and prepayments where PLS did not return funds to banks. Tarantino managed around 100-200 Mailbox Etc. accounts, set up to receive invoices from banks to doctors, with instructions from an employee in Massachusetts to facilitate address changes and account openings.

Faxes between Roger Drayer and the Petitioner were presented as evidence regarding the establishment of Mailboxes Etc. accounts, which were ultimately closed by PLS when the Petitioner discovered that prepaid accounts did not generate invoices from First Sierra, leading to a shift to a "pay ahead" scheme. 

In a separate scheme, PLS submitted loan applications to multiple lenders without the borrower's consent, retaining funds from several loans for its own use instead of forwarding them to the applicants. A summary chart was introduced, highlighting thirty-two instances where banks funded loans to PLS, but PLS did not pass these funds to the borrowers. 

Dr. Eve Ann James-Wilson, a victim of this scheme, sought a consolidation loan from PLS in 2001 but received none of the promised $100,000 despite executing loan documents. Instead, she received bills from banks for loans that PLS admitted had not been funded, leaving PLS liable for the obligations. 

Additionally, PLS engaged in a scheme to misrepresent the nature of loans by disguising working capital loans as leases for new equipment. PLS created sham companies, such as Riteway Health Services, to generate false invoices for equipment that doctors already owned, allowing them to secure larger loans under the pretense of purchasing new equipment. Susan Cottrell, a PLS employee, testified that Riteway existed only on paper and that no equipment was ever shipped or sold to PLS, as invoices were fabricated using templates and doctored information provided by the Petitioner.

Cottrell was instructed by the Petitioner not to send Riteway invoices to doctors but chose to do so, acknowledging its wrongfulness. Tarantino, the nominal President of Riteway, oversaw a company devoid of employees, equipment, or funds. False invoices were generated in Massachusetts, and checks from PLS to Riteway were created to falsely indicate payment, later voided. Cottrell conducted verbal audits for PLS to confirm doctors understood lease agreements and received equipment, though she was directed to omit inquiries about the equipment since it was not new and was already in the doctors' possession. 

GHT, another fictitious company formed under Tarantino’s name, aimed to reduce PLS’s tax liability but did not engage in actual financial transactions, despite appearing in PLS’s financial statements. The Hospitality Services of Middle Tennessee (HSMT) scheme involved fraudulent loans to a hotel misrepresented as a medical clinic, supported by fake invoices from Riteway. Testimonies confirmed HSMT was a hotel without any medical operations, and loan documents allegedly signed by its partners were forged. The Petitioner failed to clarify unauthorized loans to HSMT when questioned, and Cottrell did not inform First Sierra about HSMT's true nature. Evidence indicated PLS arranged seventeen loans totaling $2,343,140.15 for HSMT, but only $650,000 was disbursed to the hotel.

Additionally, Stephen Barker, a co-defendant, ran a similar scheme through his California companies, MedPro and Carefree, where Carefree brokered loan applications for PLS, and MedPro issued false medical equipment invoices to facilitate improper lending approvals.

Carefree utilized similar documentation as PLS for financing deals, primarily involving MedPro invoices that inaccurately indicated loans were secured with new medical or dental equipment. Cottrell, who obtained finalized loan documents from Carefree, submitted applications to Crawford & Sons for community banks and to PLS’s New York office for First Sierra deals. She noted that many MedPro invoices falsely represented equipment purchases by PLS and were sent directly to a MedPro bank account for loan disbursement, with separate checks for commissions to Carefree, which were sanctioned by the Petitioner. Hundreds of Carefree transactions were funded by First Sierra, with Cottrell conducting verbal audits of MedPro deals similar to those for Riteway, but without inquiries regarding the equipment's condition since it was often not new. During these audits, neither Cottrell nor Barker mentioned MedPro’s name. Cottrell also prepared delivery and acceptance receipts for loans, falsely certifying that equipment had been delivered and accepted by doctors, a process directed by the Petitioner. Similarly, Tallie Jo Allen, an administrative assistant at Carefree, prepared loan documents and MedPro invoices, asserting that all of Carefree’s business was with PLS. She filled in equipment lists after doctors signed blank applications, unaware if the listed equipment was new or used, and was instructed to represent it as new. Allen created around 200 MedPro invoices, which were consistently billed to PLS, under Barker's guidance, using a template that defaulted to PLS as the seller without any actual equipment orders or storage at Carefree.

The invoice amounts provided to Allen by Stephen, Evan, or Bryn Barker consistently matched the loan amounts. Allen included a doctor’s address on MedPro invoices but did not arrange or was unaware of any equipment being shipped from MedPro to the doctor. Occasionally, Allen received invoices from other vendors indicating that doctors purchased equipment elsewhere, yet these were incorporated into the MedPro invoices as if sold by MedPro. Allen corrected any invoice errors and submitted revised invoices to PLS without consulting MedPro, directing her inquiries to Barker instead. She never communicated with doctors about MedPro and did not send them MedPro invoices, which were unsigned by the doctors. Barker instructed her to claim that equipment was not available.

Testimony from doctors at trial revealed discrepancies in the invoicing. Dr. Tim Silegy, who sought a loan for $50,000 and later canceled a $25,000 loan, reported that he received a billing inquiry for the canceled loan and did not recognize a MedPro invoice linked to it, asserting that the equipment listed was already in his office. Dr. Anita Srinivasa, who arranged loans for purchasing an existing medical practice in 2001, received an invoice for an equipment loan she never obtained, affirming the equipment listed was pre-existing and not newly purchased from MedPro.

Evidence was presented indicating attempts to conceal fraudulent activities from banks. Zambaras testified about a meeting with First Sierra regarding an account review, where he was informed that Roger Drayer had prepared altered records for the audit, advising him to use a duplicate set of records if asked to pull up any physician's lease accounts.

Zambaras discovered discrepancies between a duplicated database and the company's actual records, revealing unpaid payments and misleadingly current delinquent accounts. When instructed by Roger Drayer to present specific account records, Zambaras disregarded these instructions and provided original information instead. Following the audit, First Sierra terminated its relationship with PLS, which subsequently struggled to secure new loan funding.

Under 28 U.S.C. § 2255, relief is granted for constitutional errors, jurisdictional deficiencies, or fundamental defects leading to a miscarriage of justice. Courts exercise discretion in granting such relief, emphasizing the importance of finality in criminal convictions. A defendant can raise a procedurally defaulted claim in habeas if they demonstrate cause and actual prejudice or prove actual innocence. Ineffective assistance of counsel claims can be pursued in collateral proceedings regardless of whether they were raised on direct appeal.

To succeed on an ineffective assistance claim, the petitioner must show that counsel's performance was objectively unreasonable and that there is a reasonable probability the outcome would have differed without those errors. Strategic decisions made by counsel are generally not subject to second-guessing. The focus of inquiry is whether the adversarial process's breakdown rendered the proceeding's outcome unreliable. Courts may reject ineffective assistance claims even if counsel's performance was below reasonable standards if overwhelming evidence of guilt exists.

The Petitioner seeks discovery and amendments to his habeas petition, but the Court finds no good cause for the discovery requests, as they are either irrelevant or already provided by the Government. The proposed amendments lack substantive claims and are deemed futile. 

In addressing the habeas corpus relief sought due to alleged ineffective assistance of counsel, the Court determines the arguments are without merit. The Petitioner’s criticisms of trial counsel’s cross-examination strategy are dismissed, as such strategic decisions are generally not grounds for ineffective assistance claims. Claims regarding counsel’s failure to impeach Government witnesses based on minor discrepancies are also rejected, with the Court noting that counsel did attempt to impeach credibility. 

The Petitioner’s assertion that IRS Agent Christopher King's testimony misled the court is countered by the IRS’s Internal Revenue Manual, which confirms the accuracy of the command code used. Additionally, the Petitioner incorrectly claims his lawyers did not argue that the banks he defrauded did not lose money; in reality, this argument was raised multiple times throughout various stages of the trial and appeal process. The Court finds all remaining claims unpersuasive.

The Petitioner claims ineffective assistance of counsel, arguing that his attorney should have called Joseph Conway as a witness, failed to challenge the indictment, and did not present certain pretrial issues to the jury. However, the Court highlights that Conway invoked his Fifth Amendment right, rendering his testimony unavailable. Additionally, it notes that challenging the indictment was unnecessary since the jury was instructed it was not evidence. The Petitioner also did not demonstrate how the pretrial issues would have been admissible. Ultimately, the Court concludes that the Petitioner did not establish ineffective assistance, and even if there were shortcomings in representation, the overwhelming evidence of guilt would negate any claims for habeas relief. Testimony from multiple witnesses, including relatives and corroborative documentary evidence, firmly implicated the Petitioner in the fraudulent scheme. Consequently, the Court dismisses the Petitioner’s § 2255 habeas petition and denies his motions, instructing the Clerk to close the case.