United States District Court, W.D. Louisiana, Lake Charles Division
JAMES RAY PHIPPS B.O.P. # 25807-001
WARDEN FCI OAKDALE
REPORT AND RECOMMENDATION
KATHLEEN KAY, UNITED STATES MAGISTRATE JUDGE
the court is a petition for writ of habeas corpus [doc. 1,
doc. 1, att. 1] and memorandum in support [doc. 10] filed
pursuant to 28 U.S.C. § 2241 by James Ray Phipps, who is
proceeding pro se in this matter. Phipps is an
inmate in the custody of the Bureau of Prisons and is
currently incarcerated at the Federal Correctional
Institution in Oakdale, Louisiana. The government has filed a
response [doc. 13] and the petitioner has filed a reply with
additional exhibits. Docs. 14, 15.
matter has been referred to the undersigned in accordance
with the provisions of 28 U.S.C. § 636. For the reasons
stated below, IT IS RECOMMENDED that the
petition be DISMISSED WITHOUT PREJUDICE for
lack of jurisdiction.
brings this petition to challenge the validity of his
conviction and sentence for one count of corruptly
endeavoring to obstruct and impede the due administration of
the Internal Revenue laws, in violation of 26 U.S.C. §
7212(a). Doc. 1; doc. 1, att. 1. He was convicted of that
offense, as well as three counts of mail fraud, one count of
wire fraud, and three counts of tax evasion, following a jury
trial in the United States District Court for the Northern
District of Texas. United States v. Phipps, No.
3:06-cr-114, docs. 19, 120 (N.D. Tex. Aug. 12, 2008). The
United States Court of Appeals for the Fifth Circuit
described his offense conduct as follows, based on the
evidence adduced at trial:
For over twenty years, Phipps has operated self-styled
“educational programs dedicated to teaching others how
to eliminate their debt and live within their means.”
Despite notice from the United States Postal Service
(“USPS”) that both of his prior, similarly
structured endeavors were considered illegal pyramid schemes,
Phipps created the instant program, Life Without Debt
(“LWD”). Members were encouraged to contribute
between $2, 000 and $100, 000; Phipps claimed that a larger
contribution would engender larger returns. As with prior
schemes, members were required to recruit two new members
prior to receiving any payments; they also received
educational literature and tapes with anti-income tax
messages. Notably, Phipps told participants that the income
received through LWD would not need to be reported to the
IRS. Phipps himself did not report any of his LWD income to
During his ten years of operating LWD, Phipps received
notices from the states of Georgia, Oklahoma, and Maryland
that LWD constituted a pyramid scheme, and he may be subject
to civil or criminal enforcement actions as a result. Indeed,
six LWD members were arrested in Florida for felony and
misdemeanor promotion of and participation in an illegal
lottery. Despite these warnings that his activities might be
illegal, Phipps continued to recruit new members through mass
mailings, teleconference calls, and seminars in major cities.
Phipps sent periodic small payments to members to encourage
them to remain in the program, recruit new members, or
reinvest in larger payment plans. Though Phipps marketed LWD
as a compound-leveraging investment program that would
generate large sums of money for its investors, less than
nine percent of LWD's approximately 31, 000 participants
made a net profit above their initial investment. Phipps
“earned” $4, 606, 396 from LWD, $1, 381, 683 of
which was “participation income, ” and $3, 224,
782 of which he paid to himself under aliases within the
United States v. Phipps, 595 F.3d 243, 244-45 (5th
Cir. 2010). On August 12, 2008, Phipps was sentenced to a 210
month term of imprisonment, including 22 months for the 26
U.S.C. § 7212 violation, with that term to run
concurrent to the others. Phipps, No. 03:06-cr-114,
at docs. 195, 196. By amended judgment, the court also
ordered restitution in the amount of $1, 402, 446.00.
Id. at doc. 263.
appealed his conviction to the Fifth Circuit, and that court
affirmed his conviction on all counts. Phipps, 595
F.3d at 244-48. He sought a writ of certiorari in the United
States Supreme Court, which denied same on May 24, 2010.
Phipps v. United States, 130 S.Ct. 3336 (2010).
October 7, 2010, Phipps's timely pro se Motion to Vacate
under 28 U.S.C. § 2255 (“2010 § 2255
motion”) was received by the trial court. Phipps v.
United States, No. 3:10-cv-2038, doc. 1 (N.D. Tex. Jun.
25, 2012). There Phipps raised several grounds for relief,
including lack of subject matter jurisdiction, ineffective
assistance of counsel, and unconstitutionally excessive
sentence. Id. After receiving a response from the
government, the magistrate judge recommended that the motion
be denied and the trial judge adopted the recommendation.
Id. at docs. 12, 17, 18. On September 25, 2017, he
filed another § 2255 motion in the trial court, raising
new constitutional challenges to his conviction and sentence.
Phipps v. United States, No. 3:17-cv-2720, doc. 2
(N.D. Tex. Oct. 30, 2017). The court ordered the motion
transferred to the Fifth Circuit for authorization under 28
U.S.C. § 2255(h), and that court denied same on March
28, 2018. Id. at docs. 7, 9, 12.
now brings the instant habeas petition, arguing that the
Supreme Court's recent decision in Marinello v.
United States, 138 S.Ct. 1101 (2018), shows that he was
convicted of a nonexistent offense with respect to his
conviction for corruptly endeavoring to obstruct or impede
the due administration of the Internal Revenue laws, in
violation of 26 U.S.C. § 7212(a) (“§ 7212(a)
conviction”). Doc. 1; doc. 1, att. 1. The government
has filed an opposition, arguing that the court does not have
jurisdiction over this petition because Phipps has not shown
that Marinello calls his conviction into question or
that he was foreclosed from raising such a claim in a prior
§ 2255 motion, as required to seek habeas relief in this
court through § 2255's savings clause. Doc. 13. In
his reply Phipps attempts to present additional grounds for
relief. Doc. 14.
LAW & ANALYSIS