Opinion ID: 766590
Heading Depth: 3
Heading Rank: 2

Heading: Retroactive Termination Date Precludes Prosecution Under 18 U.S.C. sec. 664

Text: 23 Even if his prosecution was not precluded by judicial estoppel as he asserts, Defendant still argues that the essential elements of the sec. 664 claim were not proven. Defendant's argument rests upon the premise that the determination of a plan termination date as of February 13, 1991, terminated the 6141 Plan, which removed an essential element from the sec. 664 claim. Because we find that establishment of a retroactive termination date does not decriminalize a defendant's conduct subsequent to that date, we reject Defendant's argument. 24 Section 664 criminalizes the conduct of [a]ny person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use or to the use of another, any of the moneys, funds, securities, premiums, credits, property, or other assets of any employee welfare benefit plan . . . . 18 U.S.C. sec. 664. An employee welfare benefit plan is defined as any employee benefit plan subject to any provision of title I of [ERISA]. 18 U.S.C. sec. 664 (emphasis added). To violate sec. 664, a defendant must steal from an employee-benefit plan, for there is no indication that sec. 664 was intended to apply to any funds other than those governed by ERISA. United States v. Bell, 22 F.3d 274, 276 (11th Cir. 1994). A terminated plan is no longer subject to any provision of Title I of ERISA, see Trippet v. Smith, 592 F.2d 1112, 1113 (10th Cir. 1979), however, an employee-benefit plan may not be terminated except by the procedure outlined in 29 U.S.C. sec. 1341. Phillips v. Bebber, 914 F.2d 31, 34 (4th Cir. 1990). Until an employee-benefit plan has been terminated, the duties and protections of Title I continue to apply to the plan. See Waller v. Blue Cross of California, 32 F.3d 1337, 1343 (9th Cir. 1994); see also Martin v. Lundberg, No. CA3-88-2470D (W.D. Tex. 1991) (applying Title I fiduciary standards to plan undergoing termination). The applicability of Title I fiduciary and criminal protections to a terminating ERISA plan is a question of first impression in this circuit. 25 Defendant contends that an essential element of the theft claim cannot be proved because of the ambiguity of the procedures for terminating an ERISA plan. When a plan is involuntarily terminated, and the trustee and plan administrator cannot agree on a termination date for the plan, the court must determine a termination date. See 29 U.S.C. sec.sec. 1348(a)(4), (b)(2). Since the judicial process and the process of involuntary termination both take time to complete, a judge often must set a retroactive termination date to ensure that plan members and the corpus of the plan both receive equitable treatment. After the establishment of a retroactive termination date, the plan during the time between the termination date and the effective liquidation of the plan exists in legal limbo where termination has occurred but liquidation has not. 26 Defendant would exploit this ambiguity by suggesting that the establishment of a termination date retroactively terminates the plan and ends the applicability of Title I of ERISA, including the applicability of sec. 664, to the 6141 Plan. However, as we have stated before, the mere establishment of a termination date does not terminate an employee-benefit plan. A plan can only be terminated in the manner prescribed by 29 U.S.C. sec. 1341, a process which undisputedly continued until at least 1995 when PBGC was appointed trustee of the 6141 Plan. We hold that, during the period between the termination date and the final liquidation of the 6141 Plan, the plan was legally within the process of termination. As such, the fiduciary and criminal standards of Title I continue to apply to the Plan. To hold that sec. 664 would become inactive whenever a retroactive termination date has been set would frustrate the purpose of sec. 664, which is to protect the employee-benefit plan members from having their assets embezzled, by allowing thieves to convert all of the money from a plan merely by laying off plan members before stealing their accrued benefits. By setting a retroactive termination date, a district court does not remove Title I protections from an employee-benefit plan; the district court merely sets an administrative point of reference that will allow the plan administrator and trustee to compute accrued benefits and premiums. 27 The prosecution of Hook should not have been precluded by judicial estoppel, nor should the establishment of a retroactive termination date have forced, as a matter of law, the conclusion that an essential element of sec. 664 had not been proved on the district court. Defendant bases his challenge to his convictions on the remaining counts in his indictment on the basis that these claims depended in their essential elements upon the theft count. Since we have found that the prosecution of the sec. 664 count was without error, we need not reach the question whether the wire fraud and money laundering counts factually depended on the sec. 664 count.