Opinion
CR-07-757-PHX-DGC.
March 21, 2008
ORDER
Defendant has filed a motion to dismiss the Indictment as duplicitous and on statute of limitations grounds. Dkt. #31. A response and reply have been filed. Dkt. ##35, 42. The Court heard oral arguments on March 18, 2008. The Court granted Defendant's motion in part, concluding that some of the offenses charged in the Indictment are time-barred. Following this ruling, the Government made an oral motion to dismiss the remainder of the Indictment without prejudice pursuant to Rule 48(a) of the Federal Rules of Criminal Procedure. The Court granted the Government's motion. This order will set forth the reasons for the Court's rulings.
I. Continuing Offenses and the Statute of Limitations.
The single-count Indictment alleges that "[o]n or about January, 1999 and continuing to March, 2007, . . . Defendant, Harold W. Pease, did steal, purloin, and knowingly convert to his own use and the use of another, money in excess of $178,000.00 of the United States or any department or agency thereof, to wit: The Social Security Administration." Dkt. #1. The Indictment alleges that this conversion violated 18 U.S.C. § 641. Id.
Relying on the five-year statute of limitations found in 18 U.S.C. § 3282, Defendant argues that the Government cannot prosecute him for conversion of Social Security funds occurring before June 26, 2002 — five years before the date of the Indictment. Dkt. #31. This argument requires the Court to decide whether the conversion offense described in the first paragraph of 18 U.S.C. § 641 constitutes a "continuing offense."
The parties agree that this issue is governed by Toussie v. United States, 397 U.S. 112 (1970). The Supreme Court in Toussie recognized the continuing offense doctrine — that the Government may prosecute a defendant for a continuing offense even if only a portion of the offense was committed within the statute of limitations. The Court cautioned, however, that the doctrine "should be applied in only limited circumstances." Id. at 115. Later, the Court stated "that continuing offenses are not to be too readily found[.]" Id. at 116.
Toussie held that a particular crime constitutes a continuing offense only if one of two circumstances exist: (1) "[t]he 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. at 115. Both parts of this test focus on the intent of Congress, not on the continuing nature of the Defendant's conduct. Thus, as the Ninth Circuit has explained, "the analysis turns on the nature of the substantive offense, not on the specific characteristics of the conduct in the case at issue." United States v. Niven, 952 F.2d 289, 293 (9th Cir. 1991), overruled on other grounds by United States v. Scarano, 76 F.3d 1471, 1477 (9th Cir. 1996); see United States v. W.R. Grace, 429 F. Supp 2d 1207, 1243 (D. Mont. 2006) ("The goal of the Toussie test is to ascertain what Congress `must have assuredly intended' with respect to the application of the statute of limitations; there is nothing about the specific conduct charged in a given case that could possibly shed light on Congress' intent."). As one court has noted, the phrase "continuing offense" for statute of limitations purposes "is a term of art[.]" United States v. Rivlin, No. 07 Cr. 524 (SHS), 2007 WL 4276712, at *2 (S.D.N.Y. Dec. 5, 2007). It "does not merely mean an offense that continues in a factual sense, as where a defendant engaged in a course of conduct comprised of repeated criminal violations," but instead means a substantive criminal offense that Congress established as continuing. Id. "In other words, there can be a distinction between conduct that is deemed a `continuing offense' under Toussie and conduct that constitutes a continuing course of criminal activity, but which is not deemed `continuing' for limitations purposes." Id.
The offense at issue in this case is conversion of government funds. The language of the Indictment makes clear — and counsel for the Government expressly confirmed at oral argument — that the Indictment alleges an offense under the first paragraph of § 641, which imposes criminal liability on any person who "embezzles, steals, purloins, or knowingly converts" government funds to his use. 18 U.S.C. § 641.
The second paragraph of § 641 imposes criminal liability on "[w]hoever receives, conceals, or retains [government money or property] with the intent to convert it to his use or gain, knowing it to have been embezzled, stolen, purloined or converted[.]" 18 U.S.C. § 641. Because the Government has not charged Defendant under this paragraph, the Court need not consider whether it creates a continuing offense for limitations purposes.
Under the first part of the Toussie test, the Court must look at the language of § 641 to determine whether Congress intended the conversion crime codified in the first paragraph to be a continuing offense. Congress has made clear in other statutes that particular crimes are to be viewed as continuing. In 18 U.S.C. § 3284, for example, Congress stated that the concealment of assets of a debtor "shall be deemed a continuing offense" until the debtor is discharged or discharge is denied. Similarly, in 22 U.S.C. § 618(e), Congress provided that failure to file foreign registration statements "shall be considered a continuing offense for as long as such failure exists." Section 641 contains no such language. The Court can find nothing in the language of the first paragraph to suggest that Congress intended to create a continuing offense.
Under the second part of the Toussie test, the Court must look to the nature of the offense codified in § 641 — conversion — and determine whether it is of such a nature that Congress must assuredly have intended that it be treated as a continuing offense. In making this determination, "[i]t is not the active or passive nature of a defendant's actions that matters, but rather whether the statute describes an offense that by its nature continues after the elements have been met." Rivlin, 2007 WL 4276712 at *3 (quotations and citations omitted). Classic examples of continuing offenses include conspiracy, escape, kidnapping, bigamy, and crimes of possession. See id. at *2 (citing cases); W.R. Grace, 429 F. Supp. 2d at 1240 n. 32 (same). These crimes, once committed, continue in effect until affirmatively ended. For example, when a defendant escapes from custody, the defendant remains in an escaped status continuously until re-arrested. Similarly, a defendant who takes possession of contraband continues to possess the contraband day after day until the possession ceases. By their very nature, these offenses continue.
The same cannot be said of conversion. As another district court has recognized in considering the first paragraph of § 641, "[c]onversion is simply the wrongful assumption and exercise of control over another's property." United States v. Beard, 713 F. Supp. 285, 291 (S.D. Ind. 1989) (citing Black's Law Dictionary, 402 (4th ed. 1968)). "What the converter intends to do (or in fact does) with the converted property is irrelevant: the act of `conversion' is completed upon the initial interference with the owner's interest." Id. Given this nature of conversion, the Court cannot conclude that Congress "assuredly must have intended" that the offense in the first paragraph of § 641 "be treated as a continuing one." Toussie, 397 U.S. at 155; see Beard, 713 F. Supp. at 291 ("the court finds that there is nothing in the nature of the crime of conversion which would indicate that Congress must have silently intended that is be treated as a continuing offense").
In arguing that this case presents a continuing offense for limitations purposes, the Government asserts that Defendant engaged in a continuing course of converting Social Security funds — that he failed for years to inform the Social Security Administration that he was receiving income from self-employment, all the while continuing to receive disability insurance payments and convert them to his own use. As explained above, however, it is not the continuing nature of the defendant's conduct, but the inherently continuing nature of the offense at issue, that gives rise to a continuing offense under Toussie. For the reasons explained above, the Court concludes that the crime of conversion of government funds as codified in the first paragraph of § 641 is not a "continuing offense." The statute of limitations therefore bars prosecution of Defendant for all violations of this provision that occurred before June 26, 2002.
The Government cited a number of cases that have considered the second paragraph of § 641 and others that have considered 42 U.S.C. § 408(d). Dkt. #35 at 7-10. Because Toussie establishes an offense-specific inquiry into the intent of Congress, and the offense at issue in this case is limited to the first paragraph of § 641, these cases are inapposite.
II. The Government's Motion to Dismiss.
Following the Court's ruling on the statute of limitations, the Government moved to dismiss the Indictment under Rule 48(a). That rule provides that "[t]he government may, with leave of court, dismiss an indictment, information, or complaint." Fed.R.Crim.P. 48(a) (emphasis added). The rule constitutes a limited check on the Executive Branch's otherwise substantial discretion in deciding when, where, and how to prosecute defendants. "The Executive remains the absolute judge of whether a prosecution should be initiated and the first and presumptively the best judge of whether a pending prosecution should be terminated. The exercise of its discretion with respect to the termination of pending prosecutions should not be judicially disturbed unless truly contrary to manifest public interest." United States v. Cowan, 524 F.2d 504, 513 (5th Cir. 1975). As the Ninth Circuit has explained, "[w]hen the government moves to dismiss counts in an indictment, the district court has limited discretion to deny the motion. The limitation on its discretion is based on separation of powers." United States v. Garcia-Valenzuela, 232 F.3d 1003, 1007 (9th Cir. 2000).
A court may deny the Government's motion only if dismissal would be "clearly contrary to the public interest" or if "the dismissal would contribute to prosecutorial harassment by subjecting a defendant to `charging, dismissing, and recharging.'" United States v. Wallace, 848 F.2d 1464, 1468 (9th Cir. 1988) (quoting Rinaldi v. United States, 434 U.S. 22, 29 n. 15 (1977)). "A fundamental consideration in assessing the propriety of a prosecutor's dismissal motion is whether the motion is made in `good faith.'" Id. In seeking dismissal under Rule 48(a), the Government is entitled to a "presumption of good faith." United States v. Welborn, 849 F.2d 980, 984 (5th Cir. 1988); see Garcia-Valenzuela, 232 F.3d at 1007 (stating that "the presumption of regularity supports . . . prosecutorial decisions") (quoting United States v. Armstrong, 517 U.S. 456, 464 (1996)).
Counsel for the Government in this case explained that the Court's statute of limitations ruling was a new development in this District, and one that might well affect the manner in which Social Security fraud cases are prosecuted. Counsel noted that the Government has several charging options in such cases, including 42 U.S.C. § 408(a), and that the Government desired to consider these options in light of the Court's ruling. Although the Court explained to the parties how this case might proceed through carefully crafted jury instructions to avoid problems of duplicity, and defense counsel favored proceeding in that manner, the Court is not free to deny the Government's motion for dismissal merely because its or defense counsel's conception of the public interest differs from that of the prosecuting attorney. "The question is not what the judge would do if he were the prosecuting attorney, but whether he can say that the action of the prosecuting attorney is such a departure from sound prosecutorial principle as to mark it an abuse of prosecutorial discretion." United States v. Ammidown, 497 F.2d 615, 623 (D.C. Cir. 1974).
The Court finds no evidence of bad faith or harassment in the Government's motion, and cannot conclude that dismissal without prejudice would be clearly contrary to the public interest. The Court accordingly granted the Government's motion and dismiss the remainder of the case without prejudice.
IT IS ORDERED:
1. Defendant's Motion to Dismiss Indictment for Duplicity (Dkt. 31) is granted with respect to all violations of the first paragraph of 18 U.S.C. § 641 that occurred before June 26, 2002. Defendant's motion is denied in all other respects.
2. The Government's oral motion to dismiss the remainder of the case pursuant to Rule 48(a) of the Federal Rules of Criminal Procedure is granted.
3. The Clerk shall terminate this action.