United States v. Gilbert , 136 F.3d 1451 ( 1998 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
-------------------------------------------
No. 97-2208
--------------------------------------------
D. C. Docket No. 3:96-CR-47-LAC
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RICHARD L. GILBERT,
Defendant-Appellant.
----------------------------------------------------------------
Appeal from the United States District Court
for the Northern District of Florida
----------------------------------------------------------------
(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. § 3284in 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