Court Opinion

ID: 72704
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:42:22+00
Date Added: 2024-06-11T09:39:39.337340
License: Public Domain

PUBLISH

                IN THE UNITED STATES COURT OF APPEALS
                       FOR THE ELEVENTH CIRCUIT

                          -------------------------------------------

                                       No. 97-2208

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                        D. C. Docket No. 3:96-CR-47-LAC

UNITED STATES OF AMERICA,

                                                             Plaintiff-Appellee,

     versus

RICHARD L. GILBERT,

                                                             Defendant-Appellant.

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                 Appeal from the United States District Court
                     for the Northern District of Florida

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                                    (March 18, 1998)

Before EDMONDSON and BIRCH, Circuit Judges, and FAY, Senior Circuit Judge.
EDMONDSON, Circuit Judge:

     Defendant Richard Gilbert appeals his

conviction          for      concealing   assets   of   a

bankrupt’s estate, in violation of 18 U.S.C.

         1
§ 152.       Defendant challenges the district

court’s failure to dismiss the indictment

 18 U.S.C. § 152 provides, in relevant part,
 1

that “[a] person who . . . knowingly and
fraudulently conceals from a custodian,
trustee, marshal, or other officer of the
court charged with the control or custody of
property, or, in connection with a case
under title 11, from creditors or the United
States Trustee, any property belonging to
the estate of a debtor . . . shall be fined
under        this   title,    imprisoned   not     more
than 5 years, or both.”

                                2
                                                 2
as barred by the statute of limitations.

We agree with Defendant. Thus, we reverse

the conviction.

                  Background

   2
    Defendant also argued, among other
things, that the indictment should have
been dismissed due to pre-indictment delay;
that insufficient evidence existed upon
which a jury could have based the guilty
verdict;    and   that       the   district   court
improperly        determined         Defendant’s
sentence.

                         3
        Defendant was the president and

sole stockholder of Corporate Air Limited,

Inc. (“CAL”).   In 1985, CAL contracted to

purchase   a    piece   of     real    estate    called

Robinson   Island.        Before       the    sale   of

Robinson    Island       to     CAL     was      final,

Defendant formed a second corporation to

take title to the property.              The second

corporation     was     Isle    of    Fantasy,    Inc.

(“IOF”). IOF paid for Robinson Island using

funds   received    from        CAL.     The     funds

                         4
provided by CAL represented either loans

to IOF or an interest in Robinson Island

to be held by CAL.

   In   1987,     CAL     filed    a    petition          for

bankruptcy        under        Chapter        11    of    the

Bankruptcy Code. The petition included the

necessary schedules of CAL’s assets.                      No

interest     in   connection           with        Robinson

Island was disclosed.

   On    1   December          1987,    CAL        had    the

bankruptcy        petition        converted              from

                           5
Chapter 11 (reorganization) to Chapter 7

(liquidation).    A bankruptcy trustee was

appointed; and eventually the existence of

                                            3
Robinson Island, and CAL’s interest, was

discovered.

   Defendant was indicted in July 1996 for

concealing assets of the bankrupt’s estate:

CAL’s     interest      in   Robinson     Island.

Defendant        moved       to   dismiss       the

   3
       Defendant disputes that an interest
existed    in    Robinson    Island.     For    our
purposes,   we    can   assume    that   such   an
interest did exist.

                         6
indictment as barred by the statute of

limitations.    That   motion   was   denied.

Defendant was convicted of concealing

assets of the bankrupt’s estate.

                Discussion

   The general statute of limitations for

noncapital offenses is

five years. See 18 U.S.C. § 3282 (“Except as

otherwise expressly provided by law, no

                       7
person      shall    be     prosecuted,        tried,     or

punished    for     any      offense,        not    capital,

unless    the   indictment             is   found   or    the

information         is     instituted        within      five

years next after such offense shall have

been     committed.”).           The    parties     do   not

dispute    that     this    five-year        limitations

period     applies         to      the       offense       of

concealment         of     assets.          Instead,      the

dispute is about when the time began to

run.

                             8
   We     review      the     district     court’s

interpretation       and    application     of   the

statute   of   limitations     de   novo.        See

Grayson v. K Mart Corp., 79 F.3d 1086, 1105

(11th Cir. 1996) (interpretation of statute is

question of law reviewed de novo); Morris

v. Haren, 52 F.3d 947, 949 (11th Cir. 1995)

(same).

   “Statutes    of    limitations        normally

begin to run when the crime is complete.”

Pendergast v. United States, 63 S.Ct. 268,

                       9
271       (1943).         But   some      offenses        are

considered continuing offenses: offenses

which are not complete upon the first

illegal    act,     but    instead       continue    to    be

                                     4
perpetrated over time.                   Offenses should

not be considered continuing unless “the

explicit language of the . . . statute compels

   A continuing offense is the “[t]ype of
   4

crime which is committed over a span of
time as, for example, a conspiracy.                  As to
period of statute of limitation, the last
act       of      the      offense        controls        for
commencement of the period. . . .”                  Black’s
Law Dictionary 291 (5th ed. 1979).

                                10
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].”   Toussie   v.

United States, 90 S.Ct. 858, 860 (1970).

     Congress   has   explicitly    recognized

concealment of assets as a continuing

offense: “The concealment of assets of a

debtor in a case under title 11 [bankruptcy]

shall be deemed to be a continuing offense

until the debtor shall have been finally

                       11
discharged or a discharge denied, and the

period of limitations shall not begin to

run until such final discharge or denial of

discharge.” 18 U.S.C. § 3284 (emphasis added).

So, not only has Congress expressed that

concealment      is   a    continuing       offense,

Congress   has    also    specified    when    that

continuing       offense       shall   be    deemed

complete for limitations purposes.

   “Statutes of limitations, both criminal

and civil, are to be liberally interpreted in

                          12
favor of repose.”     United States v. Phillips,

843 F.2d 438, 443 (11th Cir. 1988); see also

United States v. Marion, 92 S.Ct. 455, 464

n.14 (1971). The Supreme Court has addressed

what    a   court     should     consider        when

determining        when        the    statute         of

limitations begins to run:

   In   deciding     when     the    statute     of
   limitations      begins     to    run    in   a
   given case several considerations
   guide our decision.       The purpose of a
   statute of limitations is to limit
   exposure to criminal prosecution to
   a   certain     fixed     period    of   time
   following   the   occurrence        of   those

                        13
   acts the legislature has decided to
   punish by criminal sanctions. Such
   a limitation is designed to protect
   individuals from having to defend
   themselves against charges when the
   basic      facts   may      have   become
   obscured by the passage of time and
   to minimize the danger of official
   punishment because of acts in the
   far-distant past. Such a time limit
   may also have the salutary effect of
   encouraging          law    enforcement
   officials promptly to investigate
   suspected criminal activity.

Toussie, 90 S.Ct. at 860.     When doubt exists

about   the   statute    of   limitations   in   a

criminal case, the limitations period should

be construed in favor of the defendant.

                         14
See United States v. Habig, 88 S.Ct. 926, 929

(1968).       With these thoughts in mind, we

turn to the case before us.

    Section          3284       provides      that     the

limitations period begins when the debtor

is discharged or denied discharge. CAL, as a

corporate debtor, potentially could have

received discharge under Chapter 11.                 See 11

U.S.C.    §   1141(d)(1)(A)   (“Except   as   otherwise

provided in this subsection, in the plan, or

in the order confirming the plan, the

                               15
confirmation of a plan . . . discharges the

debtor from any debt that arose before the

date of such confirmation . . . .”). But when

CAL converted from Chapter 11 to Chapter

7, discharge was no longer possible. Under

Chapter 7, a corporate debtor cannot be

discharged.   See 11 U.S.C. § 727 (“The court

shall grant the debtor a discharge, unless .

. . the debtor is not an individual . . . .”).

   The government argues that, because

discharge     (and    therefore     denial       of

                        16
discharge) is no longer possible for CAL, the

statute of limitations never will begin to

run.    This view would place the offense of

concealment         of    assets   in    the   same

category       as    capital       offenses,     the

extraordinary        offenses      for   which   no

limitation exists.        We cannot agree that

Congress intended that result.

     Congress last amended 18 U.S.C. § 3284

in     1948.   The       amendments       were   in

response to an asset concealment case,

                           17
United States v. Fraidin, 63 F. Supp. 271

(D.Md. 1945), and are discussed in United

States v. Guglielmini, 425 F.2d 439 (2d Cir.

1970):

   In    1945,   six       men         had     been
   prosecuted    for       concealment           of
   assets in the District of Maryland.
   At that time, the statute governing
   the period of limitation read: “* * *
   concealment of assets * * * shall be
   deemed to be a continuing offense
   until the bankrupt shall have been
   finally discharged, and the period of
   limitation * * * shall not begin to
   run   until     such        final   discharge.”
   Because   [in     Fraidin]          there    had
   never been an application for a
   discharge, and the time to apply for

                          18
a discharge had expired, the trial
court faced a situation where the
statute of limitations would never
run under the strict wording of the
tolling section, since there was no
longer     a    possibility            of   “final
discharge.”     The district court held
that the intent of Congress could be
followed only by reading the tolling
provision as if the words “or until
denial thereof” were appended to
“final   discharge.”       .   .   .    Congress
subsequently closed the statutory gap
by amending the tolling provision
as   the      court    in          Fraidin     had
construed      it.    As       Fraidin       itself
involved a waiver, rather than a
denial, of discharge, it is clear to us
that Congress intended a waiver to
have the same effect as a denial for
the purpose of calculating the period
of limitation.

                      19
Guglielmini, 425 F.2d at 442-43 (emphasis

added) (footnote omitted).

   “While there is little recent case law on

this issue, several courts have extended the

statute of limitations under section 3284

to events that have the same effect as

denying   a   discharge   of   the   bankrupt.”

United States v. Dolan, 120 F.3d 856, 867

(8th Cir. 1997) (citing Guglielmini, 425 F.2d

at 443; Rudin v. United States, 254 F.2d 45,

                     20
47 (6th Cir. 1958); United States v. Zisblatt

Furniture Co., 78 F. Supp. 9, 12-13 (S.D.N.Y.

1948)).      Courts addressing this issue have

determined that, where discharge is no

longer possible, the date upon which the

discharge became impossible is the date

upon      which    the   statute   of   limitations

begins     to     run.    In    other    words,   the

limitations period should begin when an

event occurs that has the same effect as

the denial of discharge. Events which have

                           21
been held to have the same effect as denial

of   discharge     include     the    voluntary

dismissal of bankruptcy proceedings, the

waiver of discharge, and the failure to file

timely for discharge. See Guglielmini, 425

F.2d at 443; Rudin, 254 F.2d at 47; Zisblatt

Furniture   Co.,   78   F.   Supp.   at   12-13;   cf.

Winslow v. United States, 216 F.2d 912, 915

(9th Cir. 1954) (because power to apply for

discharge   remained         with     defendant,

statute of limitations did not begin to

                        22
run   until   application     for   discharge        or

denial of discharge).

   Considering          the         alternative

interpretation           offered        by       the

government,       that       no      statute         of

limitations applies to situations like this

one, we decide that Defendant’s view of the

law is correct:   “[T]he period of limitation

runs from the date of the event when

discharge     becomes    impossible     .    .   .    .”

Guglielmini, 425 F.2d at 443. In our view,

                        23
CAL’s choice to convert from Chapter 11 to

Chapter   7     operated      like   a   waiver   of

discharge, making discharge impossible.

   When CAL’s bankruptcy was converted

to Chapter 7, on 1 December 1987, discharge

was no longer possible; and the statute of

limitations      began     to    run.     Thus,   the

government had until December 1992 to

file an indictment for the concealment of

CAL’s assets.    The indictment in this case

was not filed until July 1996. Therefore, the

                         24
charges against Defendant were brought

after   the   expiration   of   the   period   of

limitations; and the motion to dismiss the

indictment should have been granted.

   REVERSED.

                     25