United States v. Arnold

991 F.Supp.2d 1307

UNITED STATES of America

v.Timothy John ARNOLD.

No. CR 213–26.

United States District Court,

S.D. Georgia,

Brunswick Division.

Jan. 7, 2014.

Order Clarifying Decision Jan. 16, 2014.

Frederick William Kramer, III, Brian T. Rafferty, Edward J. Tarver, James D. Durham, U.S. Attorney's Office, Savannah, GA, for United States of America.

Dan Conaway, Atlanta, GA, for Timothy John Arnold.

ORDER

LISA GODBEY WOOD, Chief Judge.

Defendant Timothy Arnold has filed a Motion to Dismiss Due to Statute of Limitations. Dkt. Nos. 34, 48. After an independent and de novo review, the undersigned concurs with the Magistrate Judge's Report and Recommendation, to which Defendant has objected. Dkt. Nos. 57, 79. The basis for Defendant's objection is that the alleged conduct occurred outside the statute of limitations, and the crimes do not constitute continuing offenses—regardless of whether they were shadowed by an overarching scheme.¹See Dkt. No. 79, at 1–3.

I. Discussion

As discussed below, only one of the charged counts is a continuing offense, but the statutes of limitation for Counts 1 through 3 have been suspended under 18 U.S.C. § 3287. Moreover, the Indictment's allegations of violations within the five-year limitations period would make dismissal premature.

A. Continuing Offenses

1. Count 1: Conversion Under 18 U.S.C. § 641

Count 1 of the Indictment alleges that Defendant converted more than $1,000 worth of United States property from January 2006 through November 2010. Dkt. No. 1, at 6. This offense, proscribed under 18 U.S.C. § 641, has a five-year statute of limitations. United States v. Trang Huydoan Phan, 754 F.Supp.2d 186, 188 (D.Mass.2010). Normally, such a period begins to run when each element of the crime has occurred and the crime is complete. Toussie v. United States, 397 U.S. 112, 115, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970) (quoting Pendergast v. United States, 317 U.S. 412, 418, 63 S.Ct. 268, 87 L.Ed. 368 (1943)). However, an offense is continuing if the substantive offense statute's language compels such a treatment, or if the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing one. Id.

As to conversion under 18 U.S.C. § 641, courts are split on whether the underlying conduct may constitute a continuing offense. See Jeffrey R. Boles, Easing the Tension Between Statutes of Limitations and the Continuing Offense Doctrine, 7 Nw. J.L. & Soc. Pol'y 219, 239–43 (2012) (explaining the initial rejection of the doctrine's application to embezzlement and later split among federal courts). Some have found that embezzlement or conversion under § 641 may constitute a continuing offense in certain circumstances. E.g., United States v. Smith, 373 F.3d 561, 567–68 (4th Cir.2004) (per curiam); United States v. George, No. CR11–213Z, 2011 WL 4559122, at *2 (W.D.Wash. Sept. 29, 2011); Trang Huydoan Phan, 754 F.Supp.2d at 190; United States v. Thompkins, No. 1:08CR65, 2008 WL 3200629, at *2 (W.D.N.C. Aug. 5, 2008); United States v. Gibson, No. 08–03057–01–CR–S–DGK, 2008 WL 4838226, at *3 (W.D.Mo. Nov. 6, 2008); United States v. Street, No. 3:07CR181TSL–JCS, 2008 WL 4372737, at *3 (S.D.Miss. Sept. 19, 2008).

Others have rejected such treatment, regardless of the underlying indictment's language. E.g., United States v. Yashar, 166 F.3d 873, 876–880 (7th Cir.1999) (rejecting treatment of a similar embezzlement offense under 18 U.S.C. § 666 as a continuing offense); United States v. Silkowski, 32 F.3d 682, 689–90 (2d Cir.1994); United States v. Crary, No. CR 13–35–M–DLC, 2013 WL 6054607, at *3 (D.Mont. Nov. 15, 2013); United States v. Tackett, Crim. No. 11–15–ART, 2011 WL 4005347, at *4–6 (E.D.Ky. Sept. 8, 2011); United States v. Young, 694 F.Supp.2d 25, 29 (D.Me.2010); United States v. Sunia, 643 F.Supp.2d 51, 75 (D.D.C.2009); United States v. Pease, No. CR–07–757–PHX–DGC, 2008 WL 808683, at *3 (D.Ariz. Mar. 24, 2008); United States v. Aubrey, 53 F.Supp.2d 1355, 1355–56 (E.D.Tex.1999); United States v. Beard, 713 F.Supp. 285, 290–91 (S.D.Ind.1989).

As to Eleventh Circuit caselaw, nothing resolves whether embezzlement under § 641 is a continuing offense. Instead, the Eleventh Circuit's application of the continuing-offense doctrine has been limited to classic manifestations of continuing offenses, such as conspiracy. See, e.g., United States v. Cruz, 805 F.2d 1464, 1477 (11th Cir.1986) (applying the doctrine to a conspiracy to address an evidentiary matter); United States v. Adams, 1 F.3d 1566, 1581–82 (11th Cir.1993) (same); United States v. Coia, 719 F.2d 1120, 1124–25 (11th Cir.1983) (applying the doctrine to a conspiracy to address a statute-of-limitations defense); United States v. Gonzalez, 921 F.2d 1530, 1547–48 (11th Cir.1991) (same); United States v. Harriston, 329 F.3d 779, 783 (11th Cir.2003) (per curiam) (same). Indeed, the Eleventh Circuit has noted the exceptional nature of the doctrine. See Cruz, 805 F.2d at 1477 n. 15 (“Unlike the continuing offense of conspiracy, most crimes occur during a brief period of time.”); United States v. Hassoun, No. 04–60001–CR, 2007 WL 4180844, at *7 (S.D.Fla. Nov. 20, 2007) (stating that the ordinary rule for the doctrine of continuing offenses is that it “should be applied in limited circumstances”). And, the Eleventh Circuit has invoked the rule of lenity and rejected the doctrine's application where Congress intended to treat each execution of a crime as separate. United States v. Kramer, 73 F.3d 1067, 1072–73 n. 11 (11th Cir.1996) (reasoning that ambiguous criminal statutes should be construed in favor of the accused in concluding that “money laundering is not a continuing offense”); see also United States v. De La Mata, 266 F.3d 1275, 1289–90 (11th Cir.2001) (declining to treat bank fraud as a continuing offense because each actionable execution is a discrete violation); Hassoun, 2007 WL 4180844, at *7–8 (treating the offense of providing material support to terrorists as a discrete offense).

After careful consideration, the Court declines to treat Count 1 as a continuing offense for the purpose of Defendant's statute-of-limitations defense. Continuing offenses are “offenses which are not complete upon the first illegal act, but instead continue to be perpetrated over time.” United States v. Gilbert, 136 F.3d 1451, 1453 (11th Cir.1998). As to the period for the statute of limitations, the offense's last act controls the commencement of the period. Id. at 1453 n. 4. Because of this effect on the limitations period, courts are admonished to construe offenses as continuous in narrow circumstances. See De La Mata, 266 F.3d at 1288–89. “[O]ffenses should not be considered continuing unless the explicit language of the statute compels such a conclusion, or the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing offense.” Id. at 1289 (quoting Toussie, 397 U.S. at 114–15, 90 S.Ct. 858) (alterations and internal quotation marks omitted). Where the statute anticipates a violation can occur multiple times in a scheme, the scheme itself should not be treated as a continuing offense, but rather the Court should treat each manifestation of the scheme as a discrete violation. See id. at 1289–90; United States v. Diaz, No. 07–20398–CR, 2008 WL 686961, at *6 (S.D.Fla. Mar. 12, 2008) (using De La Mata's treatment of bank fraud to analyze whether health care fraud is a continuing offense). “When doubt exists about the statute of limitations in a criminal case, the limitations period should be construed in favor of the defendant.” Gilbert, 136 F.3d at 1454 (citing United States v. Habig, 390 U.S. 222, 226–27, 88 S.Ct. 926, 19 L.Ed.2d 1055 (1968)).

Neither the crime's nature nor § 641's language' support treating embezzlement as a continuing offense. The relevant statutory language imposes liability on:

[w]hoever embezzles, steals, purloins, or knowingly converts to his use or the use of another ... any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof ....

18 U.S.C. § 641. This language clearly does not meet the first part of Toussie 's two-prong test. Compare18 U.S.C. § 3284 (stating explicitly that a debtor's concealment of assets is a continuing offense) with18 U.S.C. § 641 (making no explicit statement about whether the underlying crimes are continuing or discrete). As to the second part, nothing about the nature of embezzlement compels a conclusion that the harm is continuing. The government must prove beyond a reasonable doubt:

(1) that the money or property described in the indictment belonged to the United States or an agency thereof and had a value in excess of [$1,000] at the time alleged; (2) that the property lawfully came into the possession or care of the defendant, and the defendant fraudulently appropriated the money or property to his own use or the use of others; and (3) that the defendant did so knowingly and willfully with the intent either temporarily or permanently to deprive the owner of the use of the money or property so taken.

United States v. Burton, 871 F.2d 1566, 1570 (11th Cir.1989) (per curiam). The language suggests that a violation occurs each time that the defendant appropriates certain property with bad intent; the offense does not speak to what comes thereafter. Indeed, in other cases, the Government has charged multiple counts of embezzlement arising from a common scheme—implicitly countenancing the violations as discrete offenses. See, e.g., United States v. Sullivan, 28 F.Supp.2d 1365, 1368 (S.D.Fla.1998) (discussing the proper grouping of various counts, including five counts of embezzlement). Therefore, the Court does not treat embezzlement under § 641 as a continuing offense to which the limitations period is extended.

2. Count 2: Retaining...