United States v. Alfred Smith

Affirmed by published PER CURIAM opinion. Judge MICHAEL wrote a dissenting opinion.

OPINION

PER CURIAM:

Appellant, Alfred Smith, appeals his conviction for embezzling, stealing, *563purloining and converting to his own use funds belonging to the Social Security Administration (“SSA”) in violation of 18 U.S.C. § 641. Smith asserts that the indictment against him was unconstitutionally duplicitous, i.e., that it joined two or more distinct and separate offenses in one single count. United States v. Burns, 990 F.2d 1426, 1438 (4th Cir.1993). When an indictment impermissibly joins separate offenses that occurred at different times, prosecution of the earlier acts may be barred by the statute of limitations. United States v. Beard, 713 F.Supp. 285 (S.D.Ind.1989).

The district court held that aggregation of Smith’s individual offenses was proper because each was part of a single scheme or plan. For the reasons that follow, we affirm.

I.

On January 24, 2003, a Grand Jury returned a one-count indictment against Smith, charging:

Estelle Smith died on February 4, 1994. The defendant, ALFRED SMITH did not report the death of Estelle Smith to the Social Security Administration and continued on a monthly basis to receive Estelle Smith’s monthly Social Security benefits until February 3, 1998. Beginning in or about March 1994, and continuing until in or about February 1998, in the Eastern District of Virginia and elsewhere, the defendant ALFRED SMITH, did knowingly, intentionally and willfully embezzle, steal, purloin and convert to his own use, on a recurring basis, a record, voucher, money and thing of value belonging to the Social Security Administration, to wit: Social Security Administration benefits issued to Estelle Smith, totaling approximately $26,336.00.
(In violation of Title 18, United States Code, Section 641).

Section 641 provides that theft of property with a value in excess of $1,000 is a felony punishable by a maximum term of imprisonment of ten years. If the property has a value of less than $1,000, the violation is a misdemeanor with a term of imprisonment not to exceed one year. 18 U.S.C. § 641 (2004).

From March 1994 through February 1998, 48 payments were electronically deposited into Smith’s joint account with his mother; each deposit was between $525 and $583. In all, Smith received approximately $26,336 after his mother’s death.

Smith wrote checks and withdrew funds from the account. When interviewed by SSA agents, Smith admitted writing numerous checks on the account and acknowledged that he knew it was wrong for him to receive the benefit payments after his mother’s death.

II.

The purpose of a statute of limitations is to limit exposure to criminal prosecution following an illegal act. Toussie v. United States, 397 U.S. 112, 114, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970). A statute of limitations protects individuals from having to defend against charges “when the basic facts may have become obscured by the passage of time,” and minimizes “the danger of official punishment because of acts in the far-distant past.” Id. at 114-15, 90 S.Ct. 858.

Statutes of limitations should not be extended “ ‘except as otherwise expressly provided by law.’ ” Id. at 115, 90 S.Ct. 858 (quoting 18 U.S.C. § 3282). Normally, the statute of limitations will begin to run when a single criminal act is complete. Id. Criminal acts over an extended period, however, may be treated as *564a “continuing offense” for limitations purposes when a criminal statute explicitly compels that result, 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.

But we must first decide whether Smith’s charged conduct was properly aggregated into a single count. In determining whether a series of takings are properly aggregated, the court must examine the intent of the actor at the first taking. United States v. Billingslea, 603 F.2d 515, 520 (5th Cir.1979). If the actor formulated “a plan or scheme or [set] up a mechanism which, when put into operation, [would] result in the taking or diversion of sums of money on a recurring basis,” the crime may be charged in a single count. Id.

Smith’s failure to report his mother’s death evidences the intent to establish a mechanism for the automatic and continuous receipt of funds for an indefinite period. Smith’s criminal conduct was patterned and methodical. Therefore, the indictment properly aggregated his charged conduct into one count.

The indictment charges the acts of its single count in the conjunctive. See J.A. 46-47 (alleging that Smith “did knowingly ... embezzle, steal, purloin, and convert to his own use” the funds at issue) (emphasis added). But given that section 641 lists those acts disjunctively, the government, of course, only was required to prove that Smith’s conduct satisfied one of those acts to convict on that count. See United States v. Brandon, 298 F.3d 307, 314 (4th Cir.2002). The indictment, therefore, would be sufficient if embezzlement, a distinguishable act, can be charged as a continuing offense.

We think that it can; the nature of embezzlement is such that Congress must have intended that, in some circumstances, it be treated in section 641 as a continuing offense. The term "embezzle" includes "the fraudulent appropriation of property"-e.g., "the deliberate taking or retaining of the ... property of another with the intent to deprive the owner of its use or benefit"-"by a person ... into whose hands it has lawfully come. It differs from larceny in the fact that the original taking of the property was lawful, or with the consent of the owner." Kevin F. O'Malley et al., Federal Jury Practice and Instructions, §§ 16.01, 16.03 (2000 & Supp. 2003) (quoting from and elaborating on "the classic, almost standard, definition of `embezzlement' ... given by the Supreme Court in" Moore v. United States, 160 U.S. 268, 269-70, 16 S.Ct. 294, 40 L.Ed. 422 (1895)).

Although many state embezzlement statutes require that the embezzled property be acquired through some relationship of trust, it is not a universal requirement. See 3 Wayne R. LaFave, Substantive Criminal Law § 19.6 (2d ed. 2003) (noting that while, "in general, [embezzlement] may be defined as: (1) the fraudulent (2) conversion of (3) the property (4) of another (5) by one who is already in lawful possession of it," "some statutes limit the scope of embezzlement by requiring that the property be `entrusted' ... to the embezzler") (emphasis added). We do not think that section 641 imposes this requirement, a conclusion that is amply supported by a leading Supreme Court case on the scope of embezzlement under federal law, as well as by the interpretations made by other circuits of section 641 in particular. See, e.g., Paul C. Jorgensen, Embezzlement, 24 Am.Crim. L. Rev. 513, 514 (1987) ("A defendant accused of violating Section 641's embezzlement provisions initially must have lawfully acquired the property at issue, although he need not have received it through holding a posi*565tion of trust or fiduciary relation”) (emphasis added) (citations omitted).

Indeed, the classic definition of “embezzlement” set forth in Moore v. United States, 160 U.S. 268, 269-270, 16 S.Ct. 294, 40 L.Ed. 422 (1895) implicitly suggests that lawful possession need not be acquired through a relationship of trust. The Moore Court, interpreting a precursor to section 641, defined embezzlement under that statute to be “the fraudulent appropriation of property by a person to ivhom such property has been intrusted, or into whose hands it has lawfully come.” 160 U.S. at 270, 16 S.Ct. 294 (emphases added).

If the distinction made by this phrasing were not enough, the reasoning set forth in Moore firmly supports the conclusion that a fiduciary relationship is not an essential element of embezzlement. Moore involved a challenge to an indictment for embezzlement under the Act of March 3, 1875 (“the 1875 Act”) based, in part, on the ground that while the indictment named the defendant as a post office employee, it did not allege that the embezzled government monies “came into the possession of the defendant by virtue of his employment.” Id. at 270, 16 S.Ct. 294. In assessing the requirements for embezzlement under the 1875 Act, the Court discussed several earlier state and English cases that made the existence of a fiduciary or other employment relationship a necessary element of embezzlement. Id. at 270-73, 16 S.Ct. 294.

The Moore Court- explained that “[t]he ordinary form of an indictment for larceny” simply would require a sufficiently specific “allegation that the defendant stole, took, and carried away certain specified goods belonging to the person named,” without regard to a particular relationship between the thief and the victim. Id. at 273, 16 S.Ct. 294. Notably, the prohibitions of the 1875 Act “applie[d] to'any person,’ and use[d] the words ‘embezzle, steal, or purloin’ in the same connection, and as applicable to the same persons and to the same property.” Id. In contrast, “[t]he cases reported from the English courts and from the courts of the several states have usually arisen under statutes limiting the offense to certain officers, clerks, agents, or servants of individuals or corporations.” Id. at 272, 16 S.Ct. 294; see also LaFave, supra, § 19.6 (noting the distinction between the specificity of embezzlement statutes historically and the “modern view” which “is to make it embezzlement-... fraudulently to convert another’s property in one’s possession,” avoiding “the danger of omitting someone who ought to be included” from the list of persons covered by an embezzlement statute). The Court concluded that cases interpreting the requirements for embezzlement under more specific statutes “are not wholly applicable to a statute [such as the 1875 Act] which extends to every person, regardless of his employment.” 160 U.S. at 272, 16 S.Ct. 294 (emphasis added). Rather, the Moore court, although eventually holding the indictment defective on a different ground, went only so far as to say that, as to the necessary relationship for an embezzlement indictment under the 1875 Act, “the rules of good pleading would suggest, even if they did not absolutely require, that the indictment should set forth the manner or capacity in which the defendant became possessed of the property.” Id. at 274, 16 S.Ct. 294 (emphasis added).

An indictment alleging embezzlement under the current form of that statute, i.e., under section 641, requires no more. Section 641 is indistinguishable from the 1875 Act in all relevant respects; its strictures cover “whoever embezzles, steals, purloins, or knowingly converts to his use or the use of another” property of the government. *566(Emphasis added). Moreover, other circuits have similarly interpreted embezzlement under section 641 in light of Moore, and held that lawful possession need not be acquired through any particular relationship. See United States v. Miller, 520 F.2d 1208, 1211 (9th Cir.1975) (“Section 641 is not limited to persons who come into possession of property by virtue of a particular fiduciary relationship, but rather applies to all persons, regardless of their employment.”); United States v. Davila, 693 F.2d 1006, 1007 (10th Cir.1982) (citing Miller and adding that “[u]nder [Moore’s] definition [of embezzlement], lawful original possession is enough to support the crime of embezzlement [under section 641]; it is not necessary to prove a breach of fiduciary duty.”); but see, e.g., Colella v. United States, 360 F.2d 792, 799 (1st Cir.1966) (interpreting embezzlement in 29 U.S.C. § 501(c) and concluding that the term “carries with it the concept of a breach of fiduciary relationship”).

Our opinion in United States v. Stockton, 788 F.2d 210 (4th Cir.1986), which dealt not with section 641 but with 29 U.S.C. § 501(c), does not require a contrary result. Admittedly, the Stockton court did say that the extent of “embezzlement” in federal statutes “should be viewed as roughly identical to the scope of the offense as generally interpreted under state law.” Id. at 215. More importantly, however, after enunciating that general principle, the court went into detail as to what that actually meant as to the requirements of embezzlement in section 641. The Stockton court first explained that at the core of embezzlement is the act of conversion, which, of course, requires no relationship of trust. Id. at 216. The court then stated that

[t]he crime of embezzlement builds on the concept of conversion, but adds two further elements. First, the embezzled property must have been in the lawful possession of the defendant.at the time of its appropriation. Second, embezzlement requires knowledge that the appropriation is contrary to the wishes of the owner of the property.

Id. at 216-217 (emphasis added). Notably, the court 'did not enunciate any requirement that a defendant’s lawful possession be acquired through a relationship of trust, despite our recognition only a page earlier that prosecuting conversions made after gaining lawful possession through some fiduciary capacity was a motivating force for the creation of many embezzlement statutes.

The fact remains that Congress has seen fit to enact numerous statutes criminalizing various forms of embezzlement, and all indications are that where Congress has thought a particular capacity or relationship to be a necessary element of embezzlement in a given circumstance, it has specified as much in the statute. See, e.g., 18 U.S.C. § 656 (2000) (criminalizing embezzlement of a bank’s funds by “[whoever, being an officer, director, agent or employee of, or connected in any capacity with [such] bank”); 18 U.S.C. § 666(a)(1)(A) (2000) (proscribing embezzlement by “agent[s] of an organization, or of a State, local, or Indian tribal government” of those organization’s or government’s funds when those entities receive federal grants); 29 U.S.C. § 501(c) (2000) (proscribing embezzlement of the property “of a labor organization of which [a person] is an officer”). But where, as in section 641, a federal embezzlement statute applies, by its express terms, to all persons; does not specify any manner or capacity in which an act of embezzlement must be carried out; and lists embezzlement with other acts that apply to the same persons and property but that, even traditionally, do not require the defendant to have any particular relationship with the property’s *567owner, we should not read a relationship of trust into the definition of embezzlement under that statute. This is especially true when precedent indicates that the prohibited acts in section 641 were not meant to be so narrowly read. See, e.g., United States v. Morison, 844 F.2d 1057, 1077 (4th Cir.1988) (“Manifestly, as the Court in Morissette said[,] [section 641] was not intended simply to cover ‘larceny’ and ‘embezzlement’ as those terms were understood at common law but was also to apply to ‘acts which shade into those crimes but which, most strictly considered, might not be found to fit their fixed definitions.’ ”) (quoting Morissette v. United States, 342 U.S. 246, 268 n. 28, 72 S.Ct. 240, 96 L.Ed. 288 (1952)).

Accordingly, we believe that if an indictment for embezzlement under section 641 alleges the manner or capacity in which the defendant came into lawful possession of the property that he willfully converted, it is adequate in this respect. The instant indictment satisfies this standard, and is sufficient to fairly inform Smith of the conduct for which he was being charged with embezzlement, among other acts, pursuant to section 641, and to support a claim of double jeopardy in a future prosecution on the same basis.

As a joint owner of the checking account, Smith had legal control over the funds therein, including the ability to withdraw the full amount of such funds. See Va.Code Ann. § 6.1-125.9 (Michie 1999). As such, when the government voluntarily placed these funds into the account, they came into his lawful control, ie., his lawful possession. But that he had lawful possession of the funds — the issue disputed by Smith in his reply memorandum below— did not give him the right to appropriate them for his own purposes. Thus, it was his lack of legal entitlement to own the funds that renders his misappropriation of them after their deposit embezzlement.

Smith’s lawful right to control the funds after their initial deposit in his account distinguishes his possession from that which follows a common-law larceny, in that Smith’s possession did not require a “trespass in the taking”; rather, the government voluntarily, though incorrectly, continued to deposit his mother’s Social Security benefits into their jointly owned checking account after her death. See LaFave, supra, §§ 19.2, 19.6 (explaining this distinction between larceny and embezzlement); Moore, 160 U.S. at 269-70, 16 S.Ct. 294 (“[Embezzlement] differs from larceny in the fact that [with embezzlement] the original taking of the property was lawful, or with the consent of the owner....”). In the present case, however, the indictment can be fairly construed to aver a charge of embezzlement that could be proven, without surprise to Smith, by evidence showing that Smith, having legal possession of the funds as they were initially deposited into his account, then, after realizing that his continued possession was improper, willfully retained the funds for his own use, and maintained that recurring, automatic scheme of embezzlement during the charged period.

Embezzlement is the type of crime that, to avoid detection, often occurs over some time and in relatively small, but recurring, amounts. See, e.g., MacEwen v. State, 194 Md. 492, 71 A.2d 464, 468-69 (1950) (“While embezzlement is sustained by the diversion of a single sum of money at a particular time, in many cases it runs for a long period of time and consists of converting different sums of money on many dates to the use of the thief.”). At least in those cases where the defendant created a recurring, automatic scheme of embezzlement under section 641 by conversion of funds voluntarily placed in the *568defendant’s possession by the government, and maintained that scheme without need for affirmative acts linked to any particular receipt of funds — cases in which there is a strong “temporal relationship between the [completion of the] offense and culpability,” United States v. Blizzard, 27 F.3d 100, 103 (4th Cir.1994)—we think that Congress must have intended that such be considered a continuing offense for purposes of the statute of limitations.

And, of course, that is precisely what Smith has done, a conclusion that is supported by our analysis under Billingslea. Accordingly, we believe that the specific conduct at issue here is more properly characterized as a continuing offense rather than a series of separate acts. The facts found by the district court were sufficient to prove that he set into place and maintained an automatically recurring scheme whereby funds were electronically deposited in his account and retained for his own use without need for any specific action on his part, a scheme which continued from his mother’s death until payments were terminated in February of 1998.

This is not to say that all conduct constituting embezzlement may necessarily be treated as a continuing offense as opposed to merely “a series of acts that occur over a period of time”; indeed, it may well be that different embezzlement conduct must be differently characterized in this regard. Nor do we lightly dismiss the dissent’s citation to cases from other circuits that might require a different conclusion as to the application of the “continuing offense” doctrine. We are satisfied, however, that in addition to being properly aggregated into a single count, the particular kind of embezzlement that occurred in this case is correctly considered, under Toussie, to be a continuing offense.

Smith’s embezzlement scheme concluded on February 3, 1998. The Grand Jury returned an indictment against him on January 24, 2003, within five years of the final deposit of social security funds. Smith’s indictment, therefore, was timely.

For the reasons discussed above, we conclude that Smith’s conduct constituted a single continuous scheme to embezzle government funds and was of a nature that Congress must have intended that it be treated as a continuing offense. Accordingly, the judgment of the district court is

AFFIRMED.