Court Opinion

ID: 6996941
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:35:02.096784+00
Date Added: 2024-06-11T16:09:47.386986
License: Public Domain

DeMOSS, Circuit Judge,
dissenting:
With all due respect, I cannot join in the generalizations and circuitous reasoning by which the majority concludes that the conduct charged in Count 17 of the indictment was not barred by the five-year statute of limitations. Count 17 of the indictment charged a conspiracy (in violation of § 371) “to defraud insurance companies and to obtain money and property by means of false and fraudulent pretenses and promises by use of facilities of the U.S. mail (in violation of § 1341) and by use of transmissions in interstate commerce by means of wire communications (in violation of § 1343).”
The elements of the offense prohibited by § 371 are (1) the making of an agreement by two or more persons to violate a criminal statute of the United States, and (2) the doing by one or more such persons of any act to effect the object of such conspiracy, i.e., the violation agreed upon. In this case, Count 17 charges a conspiracy to violate § 1341 (mail fraud) and § 1343 (wire fraud). The elements of the offense of mail fraud are (1) the devising of a scheme to defraud or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and (2) placing any matter or thing in the U.S. mails for the purpose of executing such scheme. The elements of wire fraud are (1) devising a scheme to defraud or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and (2) transmitting by *471means of wire, radio, or television communication in interstate or foreign commerce any writing, sign, signal, picture, or sound for the purpose of executing such scheme.
In the indictment in this case, Count 17 contains a separate section headed “THE SCHEME TO DEFRAUD.” That portion of Count 17 states that the defendants “would submit or cause to be submitted, false and fraudulent claims to the insurance companies covering the losses caused by the 1990 flood in order to inflate the loss to the marina and the restaurants.” This portion of Count 17 goes on to indicate that the false and fraudulent claims “would be false and fraudulent in one or more of the following ways” and there follows six separate subparagraphs specifically describing various fictitious claims, duplicate invoices, invoices for losses which had not actually occurred, invoices which were altered to increase the amount of expenditure made, fictitious corporations that were formed to be third-party contractors, and false claims for business interruption loss which understated the amount of income to the marina.
There then follows another subpart of Count 17 headed “MANNER AND MEANS” which alleges the manner and means by which the scheme to defraud would be accomplished as follows:
1) The defendants would systematically inflate casualty and business interruption losses to the property and businesses of LOE’S HIGHPORT, INC.
2) The defendants would submit, or cause to be submitted, via the United States Postal Service or by means of interstate wire communications, false claims to the insurance companies covering such losses for payment.
I think it is critically important to note that in the subparts of Count 17 of the indictment, headed “THE CONSPIRACY”, “THE SCHEME TO DEFRAUD”, and the “MANNER AND MEANS”, there is absolutely no mention whatsoever of any controversy between the defendants and David Hull, who leased a portion of the marina premises for operating a waterfront restaurant. Likewise, there is no mention of any kind of any controversy with David Hull regarding distribution of insurance proceeds in connection with the 1990 flood damage.
Count 17 further alleged in 22 separate subparagraphs overt acts which the defendants committed on specific days and in specific manner. The first 20 of these subparagraphs allege overt acts which expressly include references to use of facilities of the U.S. Postal Service or interstate ■wire communications. The first 20 of these overt acts allege conduct occurring on dates that were more than five years prior to the filing of the initial indictment in this case. The overt act in paragraph 21 is alleged to have occurred on November 26, 1990, which is more than five years prior to the filing of the original indictment in this case on September 21, 1997; and this subparagraph contains absolutely no allegation of any kind relating to the use of facilities of the U.S. Post Office or any interstate wire transmission facility. The conduct described in subparagraph 21 is the filing of a lawsuit against David Hull, individually, and in his capacity as Waterfront Restaurant. David Hull is not a named co-conspirator in the indictment nor is he named as an unindicted co-conspirator.
The last overt act alleged in Count 17 reads as follows:
22) On or about December, 1992, BABO BEAZLEY LOE, C.D. LOE, JR. and LOE’S HIGHPORT, INC. effected a settlement of the lawsuit and received a portion of the fraudulently obtained insurance proceeds.
*472While the date of December 1992 would be within five years of the fifing of the initial indictment, there is absolutely nothing in this subparagraph 22 which specifies the use of any U.S. Post Office facility nor any interstate wire transmission facility. Neither § 1341 nor § 1343 makes a crime out of merely fraudulent misrepresentations or false promises; rather, each of these statutory provisions makes a crime out of (1) use of the U.S. mails (§ 1341) or (2) transmission of a matter by interstate wire communications for the purpose of “executing” some fraudulent scheme. I find very convincing the arguments advanced by defendant, C.D. Loe, Jr., (and adopted by Babo Beazley Loe and Loe’s Highport, Inc.) that no such conduct on the part of any of the defendants was alleged in sub-paragraphs 21 and 22 of Count 17, and there is no testimony in this record that any such conduct did occur. The language in paragraph 22 of Count 17 that the defendants “effected a settlement of the lawsuit” refers to the lawsuit described in paragraph 21, which was filed on November 26, 1990. In this lawsuit, the Loes sought recovery of money loaned to David Hull. There is no factual allegation and no factual proof that the settlement of that lawsuit was the result of anything sent by the U.S. mail nor any matter transmitted by wire communication. There is no factual allegation nor any factual proof that the settlement of such lawsuit was the result of any conduct that was false, fraudulent, or misleading. There is no factual allegation and no factual proof that the insurance company that was the victim of the scheme to defraud alleged in subpara-graphs one through 20 of Count 17 even knew of such settlement, much less that it was motivated to take any action based thereon. To the contrary, the record evidence in this case is clear and unequivocal that the insurance company had paid all sums of money which it intended to pay on the “fraudulent” claims submitted by the Loes for the 1990 flood damage by July 11, 1991, some 14 months prior to September 12, 1992, the date upon which the five-year statute of limitations cut off would be applicable. In my view, when the insurance company deposits into the registry of the court a sum of money which it considers to be full and final payment for all of the costs and losses sustained in the 1990 flood damage at the Loes’ marina, the fraud and misrepresentations would be complete regardless of whether the Loes ever withdrew the money from the registry of the court or not. Surely, actual receipt by a defendant of the cash proceeds of his fraudulent conduct cannot be an essential element of the offense; and “constructive receipt” by the defendants of the cash proceeds by the placing of the funds in the registry of the court as occurred in this case should start the running of the statute of limitations. All of the funds paid by the insurance company on the basis of fraudulent loss claims were deposited into the registry of the state court (a total of close to $2 million), and all but $2,000 of that sum was withdrawn by the defendants more than five years prior to the fifing of the first indictment in this case. While it is true that the $2,000 was disbursed from the registry of the court within five years prior to the fifing of the first indictment, I think even the majority would agree with me that the facts clearly indicate that the defendants had absolutely nothing to do with the delay in disbursement. That delay was the result of (1) errors and omissions on the part of the state district court in framing the disbursal order, (2) unauthorized decisions by the investment company holding the funds to give greater weight to the state judge’s language as to the amount to be retained rather than the amount to be paid to the defendants, and (3) a failure on the part of counsel for the *473defendants to promptly call for a correction of this mathematical error.
With surprising candor, the government recognizes that the only way it can avoid application of the five-year statute of limitations to Count 17 is to persuade the Court that the conduct described in overt act 22 (i) constitutes an act by one or more of the defendants and (ii) constitutes an act “to effect the object of the conspiracy” alleged in Count 17. In my view, the conduct in overt act 22 was neither.
The case law precedents which should guide our determination are for the most part well established. In Grunewald v. United States, 353 U.S. 391, 77 S.Ct. 963, 1 L.Ed.2d 931 (1957), the Supreme Court clearly held that in order for the government to sustain a conviction for conspiracy against a statute of limitations defense, the government must prove that the conspiracy was still in existence as of the limitations bar date and that at least one overt act by a defendant was performed after that date. Likewise, the Supreme Court has clearly stated that when doubt exists about the statute of limitations in a criminal case, the limitations period should be construed in favor of the defendant. See United States v. Habig, 390 U.S. 222, 226-27, 88 S.Ct. 926, 19 L.Ed.2d 1055 (1968). This rule of construction in favor of the defendant has been recently recognized by our Circuit in United States v. Meador, 138 F.3d 986 (5th Cir.1998). The question of whether a prosecution is barred by the statutes of limitations is a question of law, subject to plenary review on appeal in this Circuit. United States v. Manges, 110 F.3d 1162, 1169 (5th Cir.1997). In Manges, our Court stated:
Shanklin claims that he was prosecuted in violation of the applicable five-year statute of limitations. See 18 U.S.C. § 3282. With respect to the conspiracy count only, we agree. Our review is plenary.
Id. at 1169 (emphasis added). The Supreme Court has also clearly held that “statutes of limitations normally begin to run when the crime is complete.” Pendergast v. United States, 317 U.S. 412, 418, 63 S.Ct. 268, 87 L.Ed. 368 (1943). And the text of the five-year statute (18 U.S.C. § 3282) expressly states that the five-year limit applies “except as otherwise expressly provided by law.” In light of these principles, the Supreme Court has held that “the doctrine of continuing offenses should be applied in only limited circumstances” and should not be reached “unless the explicit language of the substantive criminal statute compels such a conclusion.” Toussie v. United States, 397 U.S. 112, 114, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970). Finally, in United States v. Marion, 404 U.S. 307, 322, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971), the Supreme Court stated that statutes of limitations,
represent legislative assessments of relative interests of the State and the defendant in administering and receiving justice; they “are made for the repose of society and the protection of those who may (during the limitation) ... have lost their means of defense.” These statutes provide predictability by specifying a limit beyond which there is an irrebuttable presumption that a defendant’s right to a fair trial would be prejudiced.
Id. (citation omitted).
In addition to the foregoing Supreme Court authority, we have clear holdings by panels of this Circuit to guide us in this case. In the early case of United States v. Davis, 533 F.2d 921 (5th Cir.1976), our Court wrestled with a controversy very similar to the one in this case. In Davis, the indictment charged conspiracy to violate 18 U.S.C. § 1006 by agreeing to make *474false, fictitious, and fraudulent statements and representations to the Department of Labor Manpower Administration, an agency of the United States Government. Only two of the eight overt acts set forth in the indictment were alleged as occurring within the five-year period of the statute of limitations. The defendant in Davis asserted that the two overt acts which happened within the five-year limitations period did not constitute acts in furtherance of the conspiracy alleged and our Court agreed. Relying on most of the Supreme Court law referred to earlier, our Court concluded that the prosecution of Davis was barred by the statute of limitations and granted a judgment of acquittal.
Similarly, in United States v. Manges, supra, a panel of our Court addressed specifically the circumstances of a charge of conspiracy to violate the mail fraud statute against a defendant’s contention that it was barred by the five-year statute of limitations. In reversing the conviction of the defendant on this conspiracy count, our Court pointed out that the conspiracy statute (18 U.S.C. § 371) “explicitly provides that for the crime of conspiracy to be complete, one or more of the conspirators must have performed an act to bring about the object of the conspiracy. This language cannot be stretched to include the posting of a letter by a non-conspirator.”
In my view, our Circuit holdings in Davis and Manges, provide much clearer and better instruction as to the disposition of this case now before us than does our holding in United States v. Girard, 744 F.2d 1170 (5th Cir.1984), which is the centerpiece and corner-stone of the government’s theory in this case. In Girard, the grand jury indicted the defendants for conspiring to defraud the United States in violation of 18 U.S.C. § 871. The indictment alleged that the scope of the conspiracy encompassed three purposes: (1) to secure the contract for Girard Plumbing; (2) to obtain Housing Authority funds under the contract; and (3) to conceal the fraudulent nature of the bidding from the appropriate authorities. The government asserted that the last payment due under the contract occurred on a date inside the five-year statute of limitations. In light of this payment, our Court concluded that the conspiracy continued until this last payment was received and that the acceptance of the last payment under the contract satisfied the requirement that an overt act in furtherance of the conspiracy occurred within the proscribed time frame.
I note that the majority does not say that they are bound by the prior decision in Girard, but merely categorize that decision as “instructive.” I have no quarrel with our Court’s holding in Girard based on the express circumstances described therein, but I disagree wholeheartedly with the majority’s conclusion that it provides even “instructive” help in deciding the issue here in Loe. The distinctions between Girard and Loe are fundamental and significant. In Girard, the charge was conspiracy to defraud the United States directly under § 371; in Loe, the charge ivas conspiracy to commit mail fraud and wire fraud against a private insurance company. In Girard, there were express allegations of three purposes for the conspiracy which included receipt of the funds to be paid by the United States Government under the contract with Girard which was fraudulently secured; and such allegations tied in neatly with the fact of final payment by the United States Government to Girard on the contract within the five-year statute of limitations. I challenge my colleagues in the majority to find similar express allegations in the language of Count 17 of the indictment of this case. As I have described previously, in Count 17 there is nothing in the subparts thereof describing The Conspiracy, The Scheme to *475Defraud, and The Manner and Means which can be connected with or anticipates in any way the allegations in subpart 22 of the overt acts. Finally, in Girard, it is clear that the final payment on the contract came from the United States Government agency that was the victim of the fraudulent bidding scheme. In contrast, here, it is clear even from the majority’s opinion that the insurance company that was the target and victim of the alleged mail and wire frauds deposited a final payment into the registry of the court in the sum of $638,388.34 in July of 1991, some 14 months outside of the five-year limitations period, which started on September 11, 1992. And in March 1992, some six months outside of the limitations period, the state district court ordered that $624,867.79 be paid to the Loes, which was their true and rightful share of the insurance proceeds deposited into the registry of the court. The $2,000 which was ultimately distributed to Babo Loe as Trustee for Loe’s Highport in January or February 1993, was a part of the sum previously ordered to be distributed in March 1992 by the district court. There is, therefore, no allegation in Count 17 and no proof thereof cited by the government that would indicate any payment by the insurance company that was the victim of the alleged frauds to the defendants during the five-year period of limitations.
For all of the foregoing reasons, I respectfully dissent from the portion of the majority opinion that affirms the convictions and sentences of the defendants relating to Count 17. In my view, Count 17 was clearly barred by the statute of limitations, and the convictions and sentences of defendants based on Count 17 should be vacated and set aside. For two of the defendants, Babo Loe and Loe’s Highport, Inc., vacation of these convictions and sentences would not produce any significant reduction in the sentences that they received under other convictions from this indictment. However, as to defendant, C.D. Loe, Jr., whose only conviction was under Count 17, vacation of the conviction and sentence on Count 17 would relieve him of being a convicted felon and the burden of having to respond in fines and restitution obligations after his release from prison.