United States v. Gilbert

136 F.3d 1451

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 18, 1998
• Docket: 97-2208
• Status: Published

Opinion

PUBLISH

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

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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.