F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
FEB 4 2004
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v. No. 02-5151
DOUGLAS REITMEYER; DON SPARKMAN;
JAMES ALTON WATSON; DANIEL JOSEPH
EATON; JAMES ROGER CRADDOCK;
NORTH AMERICAN CONSTRUCTION
CORPORATION; EVI CHARRINGTON
ENVIRONMENTAL, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Oklahoma
(D.C. No. 02-CR-32-EA)
Richard A. Friedman (David E. O’Meilia, United States Attorney; Kenneth P.
Snoke, Assistant United States Attorney; Douglas A. Horn, Assistant United
States Attorney, Tulsa, Oklahoma, with him on the briefs), Department of Justice,
Washington, D.C., for Plaintiff-Appellant.
R. Thomas Seymour (C. Robert Burton, IV, of Seymour Law Firm, Tulsa,
Oklahoma, with him on the brief for Defendant-Appellee Reitmeyer; James C.
Lang, G. Steven Stidham, and Brian S. Gaskill of Sneed Lang, P.C., Tulsa,
Oklahoma, on the brief for Defendant-Appellee James Alton Watson; John E.
Dowdell and Marichiel A. Lewis of Norman Wohlgemuth Chandler & Dowdell,
Tulsa, Oklahoma, on the brief for Defendant-Appellee Joseph Eaton; William G.
Rosch III of Rosch & Ross, Houston, Texas, on the brief for Defendant-Appellee
James Roger Craddock; Burck Bailey and Warren F. Bickford of Fellers, Snider,
Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma, adopted by reference
briefs of all Defendants-Appellees, for Defendant-Appellee Don Sparkman), of
Seymour Law Firm, Tulsa, Oklahoma, for Defendants-Appellees.
Before O’BRIEN, Circuit Judge, BRORBY, Senior Circuit Judge, and
LUNGSTRUM, District Judge. *
BRORBY, Senior Circuit Judge.
The government appeals the district court’s dismissal of its indictment on
statute of limitations grounds. The indictment charged certain companies and five
company officers with “execut[ing] and attempt[ing] to execute a scheme to
defraud the United States and to obtain money from the United States by false
pretenses” in violation of the Major Fraud Act, 18 U.S.C. § 1031(a). Exercising
jurisdiction under 18 U.S.C. § 3731 and 28 U.S.C. § 1291, we affirm. 1
I. Background
We recite the following factual allegations as they appear in the
superseding indictment. The United States Army Corps of Engineers awarded
*
The Honorable John W. Lungstrum, United States District Judge for the
District of Kansas, sitting by designation.
1
We deny the appellees’ motion to strike the government’s brief and
dismiss this appeal.
-2-
North American Construction Corporation a fixed price contract to construct a
groundwater treatment facility. Part of the construction required drilling wells,
which North American subcontracted to CH&A Corporation. CH&A, in turn,
subcontracted the “horizontal” well drilling portion of the contract to EVI
Cherrington Environmental, Inc.
EVI drilled the horizontal wells but experienced cost overruns. In order to
recover these additional costs, North American, with the aid of EVI and CH&A,
submitted a certified claim for equitable adjustment to the chief contracting
officer of the Corps on May 16, 1994. The companies sought almost $ 4 million,
claiming the geological conditions encountered during drilling “were different
than those represented by the government’s specification on which EVI had based
their [sic] bid.” According to the companies’ claim, the Corps’
misrepresentations “caused the project to run longer than had been anticipated”
and caused the companies to incur the “excess costs.” The companies met with
the Corps on June 28, 1995, “to promote and support” their claim.
On February 15, 2002, over seven years after the companies initially filed
their claim, the government filed an indictment in district court, and later filed a
superseding indictment, charging the companies and certain of their officers
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(collectively “the Companies”) with “execut[ing] and attempt[ing] to execute a
scheme to defraud the United States and to obtain money from the United States
by means of false pretenses” in violation of the Major Fraud Act. See 18 U.S.C. §
1031(a). The indictment alleged the Companies submitted a “false Claim for
Equitable Adjustment.” It asserted the Companies knew “there were no material
differences between [the Corps’] representations in the bid package and the actual
conditions encountered.” It also alleged the Companies intentionally withheld
from their claim a report prepared by EVI concluding the Corps provided
information that “would have correctly warned a prospective horizontal driller of
the hard drilling conditions ultimately encountered.”
In response, the Companies filed motions to dismiss the indictment, arguing
“the statute of limitations for the charged offense expired before the original
Indictment was returned.” The relevant statute of limitations requires the
government to commence a prosecution within seven years after an offense is
committed. See 18 U.S.C. § 1031(f). Since the government returned the
indictment more than seven years after the Companies filed the claim for
equitable adjustment, the Companies argued the “action was commenced outside
the limitations period, and therefore, must be dismissed.”
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The district court agreed with the Companies’ argument and concluded the
statute of limitations began running when the Companies filed their claim for
equitable adjustment on May 16, 1994. The district court therefore concluded the
government commenced its prosecution outside of the limitations period by
returning the indictment roughly nine months after the limitations period expired.
(Apt. App. at 139.) As a result of these conclusions, the district court granted the
Companies’ motions and dismissed the indictment. The government appeals. 2
II. Discussion
On appeal, the government argues the district court incorrectly dismissed
the indictment on statute of limitations grounds. We review this question de
novo. United States v. Thompson, 287 F.3d 1244, 1248-49 (10th Cir. 2002);
Foutz v. United States, 72 F.3d 802, 804 (10th Cir. 1995). We test the indictment
“solely on the basis of the allegations made on its face, and such allegations are to
be taken as true.” United States v. Hall, 20 F.3d 1084, 1087 (10th Cir. 1994).
2
We granted the government’s motion to dismiss this appeal against North
American and EVI (CH&A was not a party), leaving only the individual
defendants as parties to this appeal. For purposes of clarity and continuity,
however, we continue to refer to the individual defendants collectively as “the
Companies” for the remainder of this opinion.
-5-
The statute of limitations under the Major Fraud Act states: “A prosecution
of an offense under this section may be commenced any time not later than 7
years after the offense is committed, plus any additional time otherwise allowed
by law.” 18 U.S.C. § 1031(f). “[C]riminal statutes of limitation are to be
liberally interpreted in favor of repose.” United States v. Marion, 404 U.S. 307,
323 n.14 (1971). “Statutes of limitations normally begin to run when the crime is
complete.” Pendergast v. United States, 317 U.S. 412, 418 (1943). “A crime is
complete as soon as every element in the crime occurs.” United States v. Payne,
978 F.2d 1177, 1179 (10th Cir. 1992) (quotation marks and citation omitted).
Under the principles discussed above, the statute of limitations began
running in this case when the Companies first “committed” or completed an
offense under the Major Fraud Act. In order to determine when the Companies
committed an offense, however, we must first determine what constitutes an
offense under the Act.
In relevant part, the Act prescribes fines and imprisonment under certain
circumstances for “[w]hoever knowingly executes, or attempts to execute, any
scheme or artifice with the intent – (1) to defraud the United States; or (2) to
obtain money or property by means of false or fraudulent pretenses,
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representations, or promises.” 18 U.S.C. § 1031(a). 3 Under the plain language of
the Act, an offense is each knowing “execut[ion]” or “attempt[ed] execut[ion]” of
a scheme or artifice to defraud or obtain money by false pretenses. Id. Each act
in furtherance of a scheme does not constitute a separate offense, see United
States v. Sain, 141 F.3d 463, 473 (3d Cir.), cert. denied, 525 U.S. 908 (1998);
however, the Act contemplates prosecution of multiple counts when there are
multiple “executions” of a single scheme, see 18 U.S.C. § 1031(c) (imposing a
maximum fine for “a prosecution with multiple counts under this section”). This
reading of the Act is consistent with this and other circuits’ interpretation of the
3
In full, the Act provides:
Whoever knowingly executes, or attempts to execute, any scheme or
artifice with the intent –
(1) to defraud the United States; or
(2) to obtain money or property by means of false or fraudulent
pretenses, representations, or promises,
in any procurement of property or services as a prime contractor with
the United States or as a subcontractor or supplier on a contract in
which there is a prime contract with the United States, if the value of
the contract, subcontract, or any constituent part thereof, for such
property or services is $1,000,000 or more shall, subject to the
applicability of subsection (c) of this section, be fined not more than
$1,000,000, or imprisoned not more than 10 years, or both.
18 U.S.C. § 1031(a).
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nearly identical language found in the bank fraud statute, 18 U.S.C. § 1344. 4 See
United States v. De La Mata, 266 F.3d 1275, 1287 (11th Cir. 2001), cert. denied,
535 U.S. 989 (2002); United States v. Colton, 231 F.3d 890, 908-09 (4th Cir.
2000); United States v. Bruce, 89 F.3d 886, 889 (D.C. Cir. 1996); United States v.
Harris, 79 F.3d 223, 232 (2d Cir.), cert. denied, 519 U.S. 851 (1996); United
States v. Longfellow, 43 F.3d 318, 323 (7th Cir. 1994), cert. denied, 515 U.S.
1122 (1995); United States v. Wall, 37 F.3d 1443, 1446 (10th Cir. 1994); United
States v. Molinaro, 11 F.3d 853, 860 (9th Cir. 1993); United States v. Lilly, 983
F.2d 300, 304 (1st Cir. 1992); United States v. Heath, 970 F.2d 1397, 1402 (5th
Cir. 1992); United States v. Schwartz, 899 F.2d 243, 248 (3d Cir. 1990).
4
The bank fraud statute provides:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice –
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets,
securities, or other property owned by, or under the custody or
control of, a financial institution, by means of false or fraudulent
pretenses, representation, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than
30 years, or both.
18 U.S.C. § 1344.
-8-
Although the Act criminalizes each knowing “execution” or “attempted
execution” of a scheme, the Act does not define these terms. Nevertheless, case
law interpreting the term “execution” in the bank fraud context provides some
guidance. In determining what constitutes an “execution,” a court should first
“‘ascertain the contours of the scheme.’” Wall, 37 F.3d at 1446 (quoting United
States v. Rimell, 21 F.3d 281, 287 (8th Cir. 1994)). A court should then
determine the conduct necessary to “execute” or complete the scheme. Id.
“[W]hether [conduct] is an ‘execution’ of the scheme or merely a component of
the scheme will depend on several factors including the ultimate goal of the
scheme, the nature of the scheme, the benefits intended, the interdependence of
the acts, and the number of parties involved.” De La Mata, 266 F.3d at 1288.
Other factors the court may consider include whether the conduct created a “new
and independent” financial risk, United States v. Allender, 62 F.3d 909, 913 (7th
Cir. 1995), cert. denied, 516 U.S. 1076 (1996); De La Mata, 266 F.3d at 1288, or
involved “a new and independent obligation to be truthful,” Molinaro, 11 F.3d at
861 n.16. Essentially, the conduct constituting an “execution” will “depend on
the particular facts” of each case. Wall, 37 F.3d at 1446.
Applying these principles to the facts of this case, we agree with the district
court that the Companies “executed” their alleged scheme to defraud and obtain
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money from the government when they filed their claim for equitable adjustment
on May 16, 1994. The Companies’ alleged scheme was to “fraudulently seek
[almost four million dollars] from the United States” by certifying and submitting
“a false Claim for Equitable Adjustment.” Once the Companies filed their claim,
they did not need to engage in any additional conduct to realize the ultimate goal
of their scheme – the receipt of four million dollars from the government. 5 At
this point the Companies’ conduct first created a financial risk to the government
5
The government asserts the Companies’ subsequent actions were a
necessary part of the scheme and therefore part of the execution. The government
argues the Companies “were aware that their scheme could not succeed until they
and the government had taken additional steps to process the claim,” i.e., the
government “had to conduct an audit” and the Companies had “to persuade the
Corps ... to accept the merits of their claim for reimbursement.” In support of this
assertion, the government relies on affidavits the district court did not consider.
This it cannot do. Absent an exception not relevant here, “[a]n indictment should
be tested solely on the basis of the allegations made on its face, and such
allegations are to be taken as true.” Hall, 20 F.3d at 1087. “Courts should refrain
from considering evidence outside the indictment when testing its legal
sufficiency.” Id. Although the indictment in this case mentions the Companies’
efforts to “promote and support” their claim as part of the scheme, there is
nothing in the indictment that states these efforts were a necessary part of the
scheme. To the contrary, the indictment states the Companies “request[ed]” a
meeting with the Corps “to promote and support” their claim. On the basis of the
indictment, we conclude the Companies did not need to engage in any conduct
except filing the claim to realize the ultimate goal of their scheme.
The government also asks us to leave certain factual questions, including
the issue above, for the jury to resolve at trial. We reject this request because, as
discussed above, we test the indictment “solely on the basis of the allegations
made on its face, and such allegations are to be taken as true.” Id.
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and involved an obligation to be truthful. We therefore conclude the Companies
“executed” their scheme on May 16, 1994, and the statute of limitations began
running on this date.
The government nonetheless argues for various reasons it filed the
indictment within the statute of limitations period. We divide this argument into
three parts and address each in turn: (a) the Companies’ conduct was an “attempt
to execute” a scheme to defraud or obtain money that was underway during the
Companies’ June 28, 1995, meeting with the Corps; (b) the Companies’ conduct
was an “execution” of a scheme to defraud or obtain money that continued at least
until their 1995 meeting with the Corps; and (c) the 1995 meeting with the Corps
was an independent “execution” or “attempted execution” of a scheme to defraud
or obtain money.
A. An Attempted Execution
The government argues the Companies’ entire course of conduct was an
“attempted execution” of a scheme to obtain money by false pretenses because
“there is no doubt that a scheme to obtain money by false representations is
executed when it is completed, that is, when money is obtained.” According to
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the government, “the collective steps leading to obtaining a sum of money by
false representations will be a single attempt, until the money is obtained and the
attempt merges with the substantive offense.” Under the facts of this case, the
government believes the Companies’ “attempt offense was first committed not
later than the filing of the claim” and “was underway at the time of the June 28,
1995 ... meeting.” We reject the government’s argument.
The language of the Major Fraud Act does not support the government’s
cramped definition of an “execution” of a scheme to obtain money by false
pretenses. 6 In relevant part, the Act punishes “[w]hoever knowingly executes, or
attempts to execute, any scheme or artifice with the intent ... to obtain money or
property by means of false or fraudulent pretenses.” 18 U.S.C. § 1031(a)(2). The
Act does not define an execution as the receipt of money by false pretenses.
Instead, the Act punishes the execution of a scheme “with the intent to obtain
6
The government argues “the rule of lenity counsels that the execution of a
scheme to obtain money by false representations is committed when some of that
money is obtained.” The rule of lenity states that “‘[w]hen the intent of Congress
as to the unit of prosecution cannot be clearly discerned, doubt must be resolved
in favor of lenity.’” United States v. Jones, 841 F.2d 1022, 1023 (10th Cir. 1988)
(quoting United States v. Valentine, 706 F.2d 282, 293 (10th Cir. 1983)).
“Consequently, ambiguity in the definition of conduct to be punished must be
settled against turning a single transaction into multiple offenses.” Id. The rule
of lenity does not apply in this case, however, because the statute is not
ambiguous.
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money.” Id. If we were now to conclude an execution requires the receipt of
money, the phrase “with the intent to obtain money” would become largely
superfluous with respect to executed schemes. We must avoid this result. See
United States v. Collins, 313 F.3d 1251, 1254 (10th Cir. 2002). 7
The government nevertheless argues “[t]he bank-fraud cases are consistent
with [its] view.” 8 For example, it extracts language from a Seventh Circuit case
stating “[t]he execution of the fraudulent scheme is complete upon the movement
of money, funds, or other assets from the financial institution.” United States v.
Anderson, 188 F.3d 886, 891 (7th Cir. 1999) (citing United States v. Christo, 129
7
The government has its own concern about part of the Major Fraud Act
becoming superfluous. It argues that “[i]f ... each significant constituent act is
itself an ‘execution’ of the scheme to obtain money, there would not seem to be
any rationale for Congress to have specified that an attempted execution also was
an offense.” We do not hold, however, that each significant constituent act is an
“execution” of a scheme to obtain money by false pretenses. We hold only that an
individual need not actually obtain money in order to “execute” a scheme.
8
The government does direct us to one case involving the Major Fraud
Act, United States v. Sain, 141 F.3d 463 (3d Cir. 1998). In that case, the Third
Circuit held an indictment charging defendants with multiple “executions” of a
scheme was not multiplicious. Id. at 473. In reaching this conclusion, the court
noted: “There is no evidence that the defendants had determined a specific
amount of money that they wanted to obtain and took several steps to get that
single amount.” Id. We fail to see how this language supports the government’s
contention an “execution” of a scheme to obtain money does not occur until the
money is actually obtained.
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F.3d 578, 580 (11th Cir. 1997)). The Seventh Circuit also recognized in this case,
however, “the crime of bank fraud is complete when the defendant places the
bank at a risk of financial loss, and not necessarily when the loss itself occurs.”
Anderson, 188 F.3d at 888. In any event, we believe the cases cited by the
government are inapposite. While the movement of money may be a useful factor
to consider in determining whether an indictment is multiplicious, see United
States v. Mancuso, 42 F.3d 836, 847-48 (4th Cir. 1994); United States v. Brandon,
17 F.3d 409, 422 (1st Cir. 1994); Lilly, 983 F.2d at 305; United States v. Saks,
964 F.2d 1514, 1519, 1526 (5th Cir. 1992), and may be evidence indicating an
“execution” is complete under the facts of a particular case, Anderson, 188 F.3d
at 891; Christo, 129 F.3d at 580, these cases do not go so far as to hold a
movement of money must occur in order for an individual to “execute” a scheme
under the Bank Fraud Act. Consequently, these cases do not support the
government’s offered definition of an execution under the Major Fraud Act. In
any event, we continue to believe the government’s argument is contrary to the
plain language of the Major Fraud Act. The Companies did not need to receive
money to execute a scheme to obtain money by false pretenses under 18 U.S.C.
§ 1031(a)(2).
The government also suggests the Companies’ conduct was an attempt to
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execute a scheme to defraud the United States under 18 U.S.C. § 1031(a)(1). We
reject this argument for substantially the same reasons we reject the government’s
attempted execution argument under 18 U.S.C. § 1031(a)(2). The Act does not
require an individual to actually obtain money in order to “execute” a scheme to
defraud the United States, see 18 U.S.C. § 1031(a)(1), and this reading of the
statute is supported by case law in the bank fraud context which consistently
holds an individual need only put a bank at a risk of loss in order to “execute” a
scheme to defraud, see, e.g., United States v. Young, 952 F.2d 1252, 1257 (10th
Cir. 1991) (“To support a § 1344 conviction the government does not have to
prove the bank suffered any monetary loss, only that the bank was put at potential
risk by the scheme to defraud.”).
We conclude the Companies did not need to actually obtain any money in
order to “execute” their scheme to defraud the United States or obtain money by
false pretenses. Under the facts of this case, the Companies “executed” their
scheme to defraud or obtain money when they first placed the government at a
risk of financial loss upon filing their claim for equitable adjustment in 1994. 9
9
We note our decision in United States v. Sapp, 53 F.3d 1100, 1103 (10th
Cir. 1995), cert. denied, 516 U.S. 1082 (1996), where we held “the government
need not prove that a defendant put a bank ‘at risk’ to sustain a conviction under
[the Bank Fraud Act].” We do not decide here whether the government must
show a risk, or a potential risk, of financial loss under the Major Fraud Act in
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No further conduct was necessary for the Companies to “execute” their scheme.
Accordingly, we decline the government’s invitation to interpret the Companies’
filing of the claim and subsequent actions as a single attempt to violate the Major
Fraud Act. 10
B. A “Continued” Execution
In the alternative, the government acknowledges that the Companies first
“executed” their scheme when they submitted their allegedly false claim, but it
argues the offense “continued into the limitation period to include the June 28,
1995 meeting.” In other words, the government argues the “execution of a
scheme to defraud is a continuing offense.” Under this analysis, the government
order to prove an individual “executed” a scheme to obtain money; however, we
believe it is at least a factor that may be considered, much like the movement of
money, in determining whether an “execution” occurred.
10
Contrary to the government’s argument, this holding is consistent with
the bank fraud cases in this circuit, see Young, 952 F.2d at 1257, Sapp, 53 F.3d at
1103, and the bank fraud cases in several other circuits, United States v. McNeil,
320 F.3d 1034, 1039 (9th Cir.), cert. denied, 124 S. Ct. 111 (2003); United States
v. Everett, 270 F.3d 986, 991 (6th Cir. 2001), cert. denied, 537 U.S. 828 (2002);
United States v. Briggs, 965 F.2d 10, 12-13 (5th Cir. 1992), including the First
and Seventh Circuits, United States v. Moran, 312 F.3d 480, 489 (1st Cir. 2002)
(“[T]he bank ... need not have suffered actual loss so long as the requisite intent
is established and the bank was exposed to a risk of loss.”); United States v.
Moede, 48 F.3d 238, 242 (7th Cir. 1995) (“It is sufficient the defendant intended
to cause actual or potential loss to the financial institution.”).
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believes the indictment “was timely filed” because the statute of limitations did
not begin to run until “the objective of the fraud [was] accomplished or the fraud
[was] discovered.” According to the government, it did not discover the fraud
(and therefore the statute of limitations did not begin running) until sometime
after the June 28, 1995 meeting. We disagree with the government’s argument.
The term “‘[c]ontinuing offense’ is a term of art that does not depend on
everyday notions or ordinary meaning.” United States v. Jaynes, 75 F.3d 1493,
1506 (10th Cir. 1996) (quotation marks and citation omitted). It “is not the same
as a scheme or pattern of illegal conduct.” Id. “Separate offenses may be part of
a common scheme without being ‘continuing’ for limitations purposes.” Id. at
1506 n.12. Rather, “[a] continuing offense is one which is not complete upon the
first act, but instead continues to be perpetuated over time.” De La Mata, 266
F.3d at 1288. “[T]he continuing offense doctrine applies only where it is
contended that the actual conduct of the defendant ended but the crime continued
past that time, not where ... the charged criminal conduct itself extends over a
period of time.” Jaynes, 75 F.3d at 1507 (quotation marks and citation omitted).
The Supreme Court discussed when a court should consider an offense
“continuing” for statute of limitations purposes in Toussie v. United States, 397
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U.S. 112 (1970). The Court stated “criminal limitations statutes are to be
liberally interpreted in favor of repose” and “[s]tatutes of limitations normally
begin to run when the crime is complete.” Id. at 115 (quotation marks and
citations omitted). The Court instructed that “the doctrine of continuing offenses
should be applied in only limited circumstances since ... [t]he tension between the
purpose of a statute of limitations and the continuing offense doctrine is
apparent.” Id. (quotation marks and citation omitted). The former fixes a time
limit by which the government must prosecute an individual following the
occurrence of a criminal act, and “the latter, for all practical purposes, extends
[this time limit] beyond [the statutory] term.” Id. As a result, the Supreme Court
held a court should not construe an offense as a “continuing offense” unless (1)
“the explicit language of the substantive criminal statute compels such a
conclusion”; or (2) “the nature of the crime involved is such that Congress must
assuredly have intended that it be treated as a continuing one.” Id.
No circuit court has addressed whether the “execution” of a scheme to
defraud or obtain money is a “continuing offense” for statute of limitations
purposes under the Major Fraud Act; however, the Ninth Circuit addressed this
question under the bank fraud statute. United States v. Najjor, 255 F.3d 979, 983-
84 (9th Cir. 2001), cert. denied, 536 U.S. 961 (2002). The court in Najjor held
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that the “execution” of a scheme to defraud or obtain money “is a continuing
offense” for statute of limitations purposes; therefore, the statute of limitations on
bank fraud begins to run when the last act “in furtherance of the scheme” is
committed. Id. at 983. The Najjor holding was based on a previous Ninth Circuit
case, United States v. Nash, 115 F.3d 1431 (9th Cir. 1997), cert. denied, 522 U.S.
1117 (1998), which held bank fraud was a “continuing offense” for ex post facto
purposes because the language of the statute so suggested by punishing “the
execution of the overall scheme” rather than each individual act. Id. at 1441. 11
We are not persuaded by the Ninth Circuit’s reasoning. Following the
Supreme Court’s analysis in Toussie, we hold the “execution” of a scheme under
the Major Fraud Act is not a “continuing offense” for statute of limitations
purposes. Nothing in the “explicit language” of the Act “compels” the conclusion
that the offense is “continuing.” Toussie, 397 U.S. at 115. If Congress intended
the “execution” of a scheme to be a “continuing offense,” “it could have clearly
stated so.” United States v. Dunne, 324 F.3d 1158, 1164 (10th Cir. 2003). See,
e.g., 50 U.S.C. § 856 (“Failure to file a registration statement ... is a continuing
11
Nash notes one earlier Ninth Circuit case treating a Bank Fraud Act
offense as a continuing offense, United States v. Hutchinson, 22 F.3d 846, 854
(9th Cir. 1993). Nash, 115 F.3d at 1441. However, as Nash recognizes,
Hutchinson “[did] not discuss the issue.” Id. (citing Hutchinson, 22 F.3d at 854).
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offense for as long as such failure exists, notwithstanding any statute of limitation
or other statute to the contrary.”).
Furthermore, the nature of a Major Fraud Act violation does not
“assuredly” indicate Congress intended it to be a “continuing offense.” Toussie,
397 U.S. at 115. In making this determination, it is helpful to consider whether
the offense is discrete in nature. Compare United States v. Bailey, 444 U.S. 394,
413 (1980) (holding Congress intended the crime of escape from federal custody
to be a “continuing offense” because of the “continuing threat to society posed by
an escaped prisoner”) with Toussie, 397 U.S. at 116-22 (holding Congress did not
intend the crime of failing to register for the draft to be a “continuing offense”
because the crime was complete when a male failed to register during the five-day
registration period). If a crime is discrete, it is less likely Congress “assuredly
intended” the crime to be a “continuing offense.” See Toussie, 397 U.S. at 122-
23; Nash, 115 F.3d at 1441. As we have already determined, the Major Fraud Act
criminalizes each discrete “execution” of a scheme rather than the scheme in its
entirety. Once an “execution” is complete, the crime has ended, and additional
acts do not violate the statute unless they independently constitute a separate
“execution” or “attempted execution” of a scheme. See id. at 1290. The discrete
nature of a Major Fraud Act violation makes it unlikely Congress intended it to be
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a continuing offense for statute of limitations purposes.
The government argues a Major Fraud Act violation is a “continuing
offense” because the “threat to the government posed by an execution of a scheme
to defraud ... continues during the entire period the fraud is perpetrated.” In
support of this argument, the government notes it “continu[es] to rely on the
fraudulent representations until [it] succumbs to the object of the fraud,” i.e., it
pays the “money that is the object of the fraud.” We reject this argument because
it conflicts with the plain language of the Major Fraud Act. The Act punishes
each “execution” or “attempted execution” of a scheme rather than the scheme in
its entirety or each act in furtherance of a scheme. See 18 U.S.C. § 1031(a).
Although conduct in furtherance of a scheme may perpetuate a fraud, the Act does
not punish the conduct unless it constitutes an “execution” or “attempted
execution” of a scheme. Id. We will not extend the Act to punish conduct not
expressly covered by the Act. Once the scheme is “executed,” the crime has
ended, and additional conduct in furtherance of the scheme does not extend the
statute of limitations for that particular “execution.” 12
12
In support of its argument, the government cites a few cases where there
was one “execution” but where conduct constituting the execution occurred over a
period of time. See Colton, 231 F.3d at 910; United States v. Duncan, 42 F.3d 97,
104 (2d Cir. 1994). We do not believe these cases are inconsistent with our
determination that a violation of the Major Fraud Act is not a “continuing
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The government points to cases in other circuits holding violations of the
wire fraud, bank fraud, and mail fraud statutes are continuing for venue purposes.
See United States v. Pace, 314 F.3d 344, 350 (9th Cir. 2002); United States v.
Scott, 270 F.3d 30, 34-36 (1st Cir. 2001), cert. denied, 535 U.S. 1007 (2002);
United States v. Loe, 248 F.3d 449, 465 (5th Cir.), cert. denied, 534 U.S. 974
(2001). We are not persuaded for two reasons. First, Congress specifically stated
“any offense involving the use of the mails ... is a continuing offense” for venue
purposes. 18 U.S.C. § 3237(a). Second, and more importantly, the “continuing
offense” analysis for venue purposes is “obviously different” from the
“continuing offense” analysis for statute of limitations. Dunne, 324 F.3d at 1166.
See also Toussie, 397 U.S. at 121 n.16. None of the cases cited by the
government apply the Toussie analysis. Instead, consistent with the general venue
statute, 13 these cases focus on geographic factors, i.e., whether the defendant
began, continued, or completed the offense in more than one geographic location.
See Pace, 314 F.3d at 350-51; Scott, 270 F.3d at 36; Loe, 248 F.3d at 465. An
offense may begin, continue, or end in different locations without qualifying as a
offense” for statute of limitations purposes because, as discussed above, the
statute of limitations does not begin to run until an execution is complete.
13
The general venue statute establishes venue “in any district in which
such offense was begun, continued, or completed.” 18 U.S.C. § 3237(a).
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“continuing offense” for statute of limitations purposes. See, e.g., Dunne, 324
F.3d at 1166 (concluding a violation of the Securities Exchange Act, 18 U.S.C. §
1001, is not a “continuing offense” for statute of limitations purposes even though
it may be “continuing” for venue purposes). Even assuming these circuits reached
the correct result, 14 we conclude the analysis in these particular cases is not
dispositive because of the discrete nature of an offense under the Major Fraud
Act. Cf. id. 15
The government also argues the restraint called for in Toussie is
14
In this case, we need not decide whether we agree that violations of the
bank fraud and wire fraud statutes are continuing for venue purposes.
15
For similar reasons, we are not persuaded by the government’s citation to
cases in the Eighth and Sixth circuits that hold violations of the mail fraud and
bank fraud statutes are continuing for ex post facto purposes. See United States v.
Blumeyer, 114 F.3d 758, 766 (8th Cir.) (noting mail fraud is a continuing offenses
for ex post facto purposes), cert. denied, 522 U.S. 938 (1997); United States v.
Buckner, 9 F.3d 452, 454 (6th Cir. 1993) (holding a violation of the bank fraud
statute is a continuing offense for ex post facto purposes). But see United States
v. Barger, 178 F.3d 844, 847 (7th Cir. 1999) (holding a violation of the mail fraud
statute is not a continuing offense for ex post facto purposes); United States v.
Ortland, 109 F.3d 539, 546-47 (9th Cir.) (same), cert. denied, 522 U.S. 851
(1997); United States v. Miro, 29 F.3d 194, 198 (5th Cir. 1994) (same); United
States v. Bakker, 925 F.2d 728, 739 (4th Cir. 1991) (noting mail and wire fraud
are not ongoing crimes that can “straddle” the effective date of the sentencing
guidelines). Both circuits held violations of the statutes were continuing with
little or no analysis, and neither circuit cited, much less applied, the Toussie
analysis.
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inapplicable here. The government claims “there is no tension between the
purposes of the limitation period and application of the continuing-offense
doctrine” because “Congress specifically intended” to toll the limitations period
during a period of fraudulent concealment. The government points to a portion of
the Act’s legislative history in support of its argument. 16 See S. Rep. No. 100-
503, at 14 (1988), reprinted in 1988 U.S.C.C.A.N. 5969, 5978. Even assuming
the government correctly discerns Congress’s intent, such a rule would toll the
limitations period only during periods of fraudulent concealment and not upon
every act in furtherance of a scheme. Therefore, the tension between the
limitations period and the doctrine of continuing offenses still exists.
Furthermore, if, as the government argues, there is solid evidence indicating
Congress’ intent as to what circumstances toll the limitations period, we believe
the absence of evidence that Congress intended courts to consider the offense a
“continuing offense,” or at least that every act in furtherance of a scheme tolls the
limitations period, lends support to our conclusion that a violation of the Major
16
Incidentally, the government acknowledges it “did not assert the doctrine
of fraudulent concealment in the district court as a ground for holding, on the
facts of this particular case, that the statute of limitation did not begin to run.” It
also disavows any assertion on appeal of “a plain error argument that [the]
indictment was timely due to tolling of the limitation period.” We therefore do
not consider whether the Companies’ conduct tolled the limitations period under a
doctrine of fraudulent concealment.
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Fraud Act is not a “continuing offense.” In any event, we are convinced the
language of the Major Fraud Act dictates our conclusion in this case.
We therefore conclude an “execution” of a scheme to defraud or obtain
money is not a “continuing offense” for statute of limitations purposes. 17 Under
the facts of this case, the statute of limitations began running when the
Companies “executed” their scheme on May 16, 1994. The Companies’
subsequent meeting with the Corps in 1995 was not a “continuation” of their
“execution”; the “execution” was already committed or complete once the
Companies filed their claim. The 1995 meeting was merely an act in furtherance
of the scheme which did not extend the limitations period. Although the scheme
may have continued, the Act does not punish the scheme but only the “execution.”
C. An Independent Execution Or Attempted Execution
17
The government again argues the rule of lenity “support[s] the
conclusion that an execution of a scheme to defraud ... continues as a single
offense until the object of the fraud is accomplished or the fraud is discovered”;
otherwise, a defendant may be liable for “multiple executions of the scheme to
defraud.” We have already concluded, however, the statute unambiguously
punishes each “execution” of a scheme and indicates a particular scheme may be
“executed” (and therefore punished) multiple times; the rule of lenity does not
apply under these circumstances. Jones, 841 F.2d at 1023.
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Finally, the government argues the Companies “committed a separate
offense [under the Major Fraud Act] at the June 28, 1995 meeting.” The
government claims the Companies committed a separate offense at this meeting
because (1) their “false representations [at the meeting] ... significantly increased
the risk that the claim would be paid,” and (2) “[t]he Corps detrimentally relied
on [their] misrepresentations to continue processing the claim, which entailed an
expenditure of time and money.” Once again, we reject the government’s
argument.
Nowhere does the superseding indictment allege the 1995 meeting was a
separate “execution” or “attempted execution” of a scheme. Instead, the
superseding indictment alleges the Companies arranged the meeting with the
Corps in order “to support and promote their claim” for equitable adjustment, i.e.,
the Companies wanted to increase the likelihood the Corps would pay their claim.
The meeting did not concern any other claims. It therefore did not create a new
and independent financial risk to the government or create a new and independent
obligation to be truthful. Nor did the meeting constitute a substantial step
towards a new and independent “execution.” Although the Companies’ alleged
misrepresentations at the meeting may have increased the likelihood the Corps
would pay the claim, the financial risk to the government was not new or
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independent of the risk the Companies created by filing their claim for equitable
adjustment in the first place. Likewise, the Companies’ obligation to be truthful
at this meeting derived from, or was an extension of, its initial obligation to tell
the truth when they filed the claim.
As a result of the language in the indictment, we conclude the 1995 meeting
was not an independent “execution” or “attempted execution”; it was merely an
act in furtherance of the Companies’ scheme to defraud the United States or
obtain money from the United States. Although, according to the government, the
Companies’ conduct “was not innocent,” the conduct is not an independent
offense under the Major Fraud Act.
III. Conclusion
For the reasons discussed above, we conclude the statute of limitations
began running in this case when the Companies filed their claim for equitable
adjustment on May 16, 1994. Since the government waited until February 15,
2002, to return an indictment, it did not commence this action within the seven
year limitations period. The district court’s decision dismissing the indictments is
therefore AFFIRMED.
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United States v. Reitmeyer
Court: Court of Appeals for the Tenth Circuit
Date filed: 2004-02-04
Citations: 356 F.3d 1313
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