Opinion
No. 3:22-cr-00053-SHL-SBJ
2022-12-01
UNITED STATES of America, Plaintiff, v. Deborah Lynn CURRAN, Defendant.
Torrie Jeane Schneider, United States Attorney's Office, Davenport, IA, for Plaintiff. Raphael M. Scheetz, Scheetz Law Office, Cedar Rapids, IA, for Defendant.
Torrie Jeane Schneider, United States Attorney's Office, Davenport, IA, for Plaintiff. Raphael M. Scheetz, Scheetz Law Office, Cedar Rapids, IA, for Defendant.
ORDER ON MOTION TO CONSOLIDATE OR DISMISS
STEPHEN H. LOCHER, UNITED STATES DISTRICT JUDGE
The statute of limitations for bank fraud is ten years. Nonetheless, the Government argues it can prosecute someone for fraudulent acts occurring more than ten years before charges are filed if the person used similar means to commit additional acts of fraud within the ten-year period. The Court rejects the Government's position and GRANTS Defendant's motion to dismiss Counts 1 and 2 of the Indictment. The Court DENIES Defendant's motion to consolidate.
I. BACKGROUND
On July 6, 2022, the Grand Jury for the Southern District of Iowa returned an Indictment charging Defendant Deborah Lynn Curran with five counts of bank fraud, in violation of 18 U.S.C. § 1344(2). (ECF 3.) The Indictment alleges that Curran was employed with Quad Cities Retina Consultants from April 1990 to August 2019. (Id., ¶ 1.) It alleges that she devised and participated in a scheme and artifice to defraud beginning "at least on or about September 11, 2008, and continuing through at least on or about August 8, 2019." (Id., ¶ 5.) The Indictment alleges that Curran carried out the scheme by: (a) forging, altering, or counterfeiting checks from her employer's bank account to herself, including through the improper use of a signature stamp; (b) creating or drafting billing checks from her employer's bank account to herself through improper use of a signature stamp; (c) making false entries into her employer's QuickBooks account to conceal the fraud; and (d) forcing bank reconciliations at the end of each month and year to cover the discrepancies in her employer's account. (Id., ¶¶ 6-10.) The scheme to defraud allegedly "resulted in the forgery of 602 checks totaling approximately $472,833 in loss" to the bank and her employer. (Id., ¶ 11.)
The Indictment charges Curran with five counts of bank fraud. Count 1 alleges bank fraud on or about November 10 and 11, 2009, involving two fraudulent checks payable to Curran in the amount of $500 each, which Curran then failed to enter in QuickBooks. (Id., ¶ 13.) Count 2 alleges bank fraud on or about December 22, 2010, involving a fraudulent check payable to Curran in the amount of $632.52, which Curran falsely entered in QuickBooks as "District Drugs $810." (Id., ¶ 13.) Count 3 alleges bank fraud on or about January 8, 2013, involving a fraudulent check payable to Curran in the amount of $949.00, which Curran falsely entered in QuickBooks as "Academy Ophthalmology." (Id., ¶ 15.) Count 4 alleges bank fraud on or about July 15, 2016, involving a fraudulent check payable to Curran in the amount of $986.90, which Curran falsely entered in QuickBooks as "7/18 sick pay." (Id., ¶ 17.) Count 5 alleges bank fraud on or about April 10, 2019, involving a fraudulent check payable to Curran in the amount of $966.39, which Curran falsely entered in QuickBooks as "Amex Pharmacy880." (Id., ¶ 19.)
The Indictment inadvertently uses paragraph numbers 12 and 13 twice, once in Count 1 and a second time in Count 2.
II. LEGAL STANDARDS AND ANALYSIS
A. The Indictment Is Not Multiplicitous.
Curran argues, first, that the indictment is multiplicitous because it charges her in multiple counts for what she claims the Government is treating as a single crime of bank fraud. "An indictment is multiplicitous if it charges the same crime in two counts." United States v. Chipps, 410 F.3d 438, 447 (8th Cir. 2005). "The main difficulty with such an indictment is that the jury can convict the defendant on both counts, subjecting the defendant to two punishments for the same crime in violation of the double-jeopardy clause of the fifth amendment." Id. "When the same statutory violation is charged twice, the question is whether Congress intended the facts underlying each count to make up a separate unit of prosecution." Id. "The unit of prosecution is the aspect of criminal activity that Congress intended to punish." Id.
The Court has little difficulty concluding the Indictment is not multiplicitous. The Eighth Circuit has squarely held that "each execution of a scheme to defraud constitutes a separate indictable offense." United States v. Barnhart, 979 F.2d 647, 651 (8th Cir. 1992); cf. United States v. Calvert, 523 F.2d 895, 914 (8th Cir. 1975) ("It is well settled that each use of the mails is a separate offense under the mail fraud statute, notwithstanding the fact that the defendant may have been engaged in one fraudulent scheme."). Thus, an indictment may allege separate counts of bank fraud for each execution of the scheme without violating the Fifth Amendment. See United States v. Rimell, 21 F.3d 281, 287 (8th Cir. 1994). The Court DENIES Curran's motion to consolidate Counts 1 through 5 into a single count, as the Indictment properly treats the conduct underlying each of those Counts as separate crimes.
B. Counts 1 and 2 Are Time-Barred and Must Be Dismissed.
1. Bank Fraud Is Not a "Continuing Offense" for Statute of Limitations Purposes.
The Court suspects that Curran expected her motion to consolidate to be denied, and that she moved for such relief primarily to set the stage for her motion to dismiss Counts 1 and 2 on statute of limitations grounds. The statute of limitations for bank fraud is "10 years after the commission of the offense." 18 U.S.C. § 3293. Curran argues that if each execution of her bank fraud scheme is a separate offense, she committed the offenses alleged in Counts 1 and 2 more than ten years prior to being indicted, and thus the Indictment is too late as to those Counts.
The Court agrees. "A statute of limitations for an offense typically begins to run once it is complete—in other words, once all elements of the offense are established." United States v. Askia, 893 F.3d 1110, 1116 (8th Cir. 2018). Here, the bank fraud offenses set forth in Counts 1 and 2 were "complete" in November 2009 and December 2010, respectively, when Curran obtained money through fraudulent checks and covered her tracks in the QuickBooks system. See Barnhart, 979 F.2d at 651. The fact that Curran later repeated her conduct does not change this conclusion. She is essentially being accused of a series of discrete acts of larceny or theft, which the Eighth Circuit identified in Askia as "well established" examples of offenses for which the statute of limitations begins to run upon completion. 893 F.3d at 1118; see also id. at 1116 ("The crime is committed and complete once the last of these elements has occurred. That point in time thus starts the clock for a statute of limitations."). The Government therefore was required under Askia to charge Curran for the conduct alleged in Counts 1 and 2 within ten years. See id. at 1119 (concluding each act of embezzlement is a "completed offense" for statute of limitations purposes even when part of a series). The Indictment, filed in July 2022, was too late. See id.
The Government argues that Askia is not controlling because it involved the offense of embezzlement under 18 U.S.C. § 666(a)(1)(A), whereas the Indictment against Curran alleges a bank fraud "scheme" under 18 U.S.C. § 1344(a). The Government argues that bank fraud, unlike embezzlement, is a "continuing offense" for which the statute of limitations does not begin to run until the last act in the alleged scheme occurs. Because Curran's final acts of alleged theft and concealment did not occur until 2019, the Government argues the July 2022 Indictment is timely as to acts of theft and concealment from more than ten years earlier.
Congress did not explicitly characterize bank fraud as a "continuing offense" when it enacted § 1344 in 1984, nor did it do so when it enacted the ten-year statute of limitations for bank fraud in 1989. See 18 U.S.C. § 3293. Thus, one of the two prongs the Government sometimes uses to establish that an offense is "continuing" is not available here. See Toussie v. United States, 397 U.S. 112, 115, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970) (crimes are continuing if the "explicit language of the substantive criminal statute compels such a conclusion"); Askia, 893 F.3d at 1116. The Government therefore must establish instead that the "nature of the crime [of bank fraud] is such that Congress must assuredly have intended that it be treated as a continuing one." Toussie, 397 U.S. at 115, 90 S.Ct. 858. The Court concludes the Government has failed to do so.
The analysis starts with the language of § 1344(a), which criminalizes a "scheme or artifice . . . to defraud a financial institution." The Government argues that a "scheme" is inherently ongoing, and thus bank fraud is different than the embezzlement statute at issue in Askia, which does not use the word "scheme." However, in Askia, the Eighth Circuit cited favorably to United States v. Jaynes, 75 F.3d 1493, 1506 (10th Cir. 1996), for the proposition that "[a] continuing offense is not the same as a scheme or pattern of illegal conduct." See 893 F.3d at 1117. Jaynes also stated, in logic that squarely applies here, that the "continuing offense doctrine applies only 'where it is contended that the actual conduct of the defendant ended but the crime continued past that time,' not where, as here, 'the charged criminal conduct itself extends over a period of time.' " 75 F.3d at 1506-07 (quoting United States v. Morales, 11 F.3d 915, 918 (9th Cir. 1993)).
Similarly, in Askia, the Eighth Circuit treated United States v. Yashar, 166 F.3d 873 (7th Cir. 1999), as persuasive authority. See 893 F.3d at 1117-18. Yashar held, in the context of what the Government tried to characterize as an ongoing embezzlement "scheme," that prosecution was untimely as to acts of embezzlement occurring outside the five-year limitations period. 166 F.3d at 879-80. By citing favorably to Jaynes and Yashar, the Eighth Circuit has strongly suggested disagreement with the Government's position that the use of the word "scheme" in § 1344(a) means bank fraud is a continuing offense for statute of limitations purposes.
This conclusion is reinforced by the similarities between § 1344(a) and the embezzlement statute at issue in Askia, 18 U.S.C. § 666(a)(1)(A). Although the latter does not use the word "scheme," it nonetheless criminalizes conduct that easily could be characterized as a "scheme to defraud" as those words are used in the bank fraud statute, save only for the victim's identity. For example, § 666(a)(1)(A) makes it a crime to "embezzle[ ], steal[ ], obtain[ ] by fraud, or otherwise without authority knowingly convert[ ]" money from an agency that receives federal funds. To commit such an offense, perpetrators generally must: (a) do something to put themselves into position to have access to the money; (b) take the money; and (c) cover up or conceal what they have done. See Askia, 893 F.3d at 1120 (recognizing that a person may commit a "series of thefts or embezzlements (which, by their nature, are crimes of concealment)"). Such conduct often will occur in a series of steps that are for all intents and purposes part of a "scheme," yet Askia held that § 666(a)(1)(A) is not a continuing offense for statute of limitations purposes. The Court believes the Eighth Circuit would reach the same conclusion with respect to bank fraud.
The Eighth Circuit would not be alone if it did so. The Eleventh Circuit has explicitly held that bank fraud is not a "continuing offense." See United States v. De La Mata, 266 F.3d 1275, 1287-89 (11th Cir. 2001). De La Mata based this holding on an important distinction between "executions" of a bank fraud scheme and "acts in furtherance" of such a scheme. Id. at 1289. The former refers to "each part of the scheme that creates a separate financial risk for the financial institution." Id. at 1288. The latter, by contrast, may support the scheme in some way but does not create a separate risk of financial harm to the bank and therefore cannot be separately charged or punished. Id. at 1289. De La Mata held that each "execution" of a bank fraud scheme is a completed offense for purposes of the statute of limitations and the ex post facto clause of Article I, Section 9, of the United States Constitution. Id. at 1289-90.
Similarly, in United States v. Reitmeyer, 356 F.3d 1313, 1322 (10th Cir. 2004), the Tenth Circuit held that each execution of a scheme under the Major Fraud Act, 18 U.S.C. § 1031(a), is a completed offense for statute of limitations purposes even though the statute criminalizes "any scheme or artifice" to defraud the United States. The Court explained: "Once the scheme is 'executed,' the crime has ended, and additional conduct in furtherance of the scheme does not extend the statute of limitations for that particular 'execution.' " Id. at 1323. The bank fraud statute is identical to the Major Fraud Act in its use of the words "scheme or artifice," and thus the Tenth Circuit presumably would conclude bank fraud is also not a "continuing offense" if squarely presented with the question. See also Jaynes, 75 F.3d at 1506 n.12 ("Separate offenses may be part of a common scheme without being 'continuing' for limitations purposes.").
In United States v. Anderson, 188 F.3d 886, 891 (7th Cir. 1999), the Seventh Circuit also essentially concluded that bank fraud is not a continuing offense, although it did not use those precise words. The defendant in Anderson was charged on June 19, 1997, with bank fraud arising out of her misappropriation of bank funds prior to June 19, 1987. Id. at 887-88. The Government argued the charges were timely because the defendant transferred the misappropriated funds in a way that allegedly continued the scheme on three occasions on or after June 19, 1987—i.e., within the ten-year period. Id. at 889. The Seventh Circuit rejected this argument, holding that the "mere act of transferring money from one bank account to another was not part of the original scheme to defraud, nor did it create new financial risk [for the bank]." Id. at 891. Instead, "[a]ny scheme [the defendant] may have conceived was completed upon receipt of the funds." Id.; accord De La Mata, 266 F.3d at 1288 ("[E]ach part of the scheme that creates a separate financial risk for the financial institution constitutes a separate execution.").
The logic of De La Mata, Jaynes, Reitmeyer, and Anderson is squarely in line with Askia in recognizing that fraud- and embezzlement-type crimes are "complete" for statute of limitations purposes when the wrongdoer obtains money or property or otherwise places the victim at risk of loss. The Court therefore concludes the Eighth Circuit would follow those cases. This means, for present purposes, that the execution of Curran's scheme as alleged in Counts 1 and 2 was complete either upon her receipt of the funds in November 2009 and December 2010, respectively, or, at the latest, when she made the false Quick-Books entries shortly thereafter. The statute of limitations therefore started running at that time and expired more than eighteen months before Curran was finally indicted.
This conclusion is unchanged by the fact that Curran allegedly engaged in hundreds of additional executions of the scheme after December 2010. These new acts did not "create new financial risk" with respect to the money she had already stolen as alleged in Counts 1 and 2. See Anderson, 188 F.3d at 891; De La Mata, 266 F.3d at 1288; Yashar, 166 F.3d at 880. The new acts therefore did not toll or re-start the statute of limitations as to those Counts. See Askia, 893 F.3d at 1120 ("The government is precluded from prosecuting the violations committed more than five years prior to the date of the indictment . . . ."); Reitmeyer, 356 F.3d at 1324 (additional conduct in furtherance of scheme does not extend statute of limitations as to alreadycompleted executions). Instead, the new acts, if they occurred within the ten-year period, merely can form the basis for new charges as to the newly-stolen funds. See Askia, 893 F.3d at 1120. ("We see nothing in criminal law that would prevent the prosecution of an individual who commits a series of thefts or embezzlements . . . from being prosecuted for those crimes that occurred within the limitations period, just because a few of the embezzlements or thefts occurred outside the five years.").
2. The Out-of-Circuit Cases Relied Upon by the Government Do Not Establish that Bank Fraud Is a "Continuing Offense" for Statute of Limitations Purposes.
To support its position that Counts 1 and 2 are timely, the Government relies heavily on United States v. Ramm, No. 20-3312, 2022 WL 456326 (3d Cir. Feb. 15, 2022), cert. denied, No. 22-5078, — U.S. —, 143 S.Ct. 228, 214 L.Ed.2d 94 (U.S. Oct. 3, 2022). However, careful review shows that Ramm does little, if anything, to help the Government. In Ramm, the defendant, a bank employee, used fraud to help a customer obtain loans between September 2001 and July 2003. Id. at *1. Later, in May 2007, the defendant provided false information to persuade the bank to extend the term of the loans and delay a "review" that otherwise would have occurred. Id. at *2. The Third Circuit held the prosecution was not time-barred even though the defendant was not indicted until March 2017 because the conduct in May 2007 was a "substantively independent 'execution' " of the scheme that "increased the bank's risk of loss." Id.
By focusing on how the May 2007 conduct independently affected the risk of loss to the bank, Ramm is largely consistent with De La Mata and Anderson in recognizing that bank fraud charges are timely only when conduct occurs within the limitations period that creates a new and separate risk of financial harm. Here, Curran's acts of fraud in July 2012 and later—i.e., the acts for which the ten-year period had not expired at the time of her Indictment—did not "increase[ ] the bank's risk of loss" as to the money she stole in November 2009 and December 2010. That money was already long gone. Thus, Ramm does not support the Government's attempt to use the post-July 2012 acts as a basis for concluding that Counts 1 and 2 are timely. See De La Mata, 266 F.3d at 1288; Anderson, 188 F.3d at 891. See also Reitmeyer, 356 F.3d at 1325 ("Although the scheme may have continued, the Act does not punish the scheme but only the 'execution.').
The Government also relies on five out-of-circuit cases characterizing bank fraud as a "continuing offense." (ECF 23, pp. 6-7.) Again, careful review shows that they provide little, if any, aid for the Government's position. Two of them dealt with the issue of venue and stand for the unremarkable proposition that bank fraud schemes with multiple integral parts may be carried out over time (as opposed to all at once) and in more than one location. See United States v. Scott, 270 F.3d 30, 36 (1st Cir. 2001); United States v. Dupre, 117 F.3d 810, 822 (5th Cir. 1997). These two cases mention nothing about the statute of limitations and do not support the Government's argument that each new execution of a bank fraud scheme restarts the ten-year period as to completed, older executions. See Reitmeyer, 356 F.3d at 1323 ("[T]he 'continuing offense' analysis for venue purposes is 'obviously different' from the 'continuing offense' analysis for statute of limitations.") (quoting United States v. Dunne, 324 F.3d 1158, 1166 (10th Cir. 2003)).
The other three cases also did not involve the statute of limitations. In United States v. Nash, 115 F.3d 1431, 1440-41 (9th Cir. 1997) and United States v. Buckner, 9 F.3d 452, 454 (6th Cir. 1993), courts analyzed whether bank fraud occurred before or after the effective date of the Sentencing Guidelines or amendments thereto. Although Nash characterized bank fraud as a "continuing offense," it held that the defendant's conduct occurred prior to enactment of the Guidelines because the offense was complete when he obtained loans from the bank by providing false statements and documents. 115 F.3d at 1441. Thus, to the extent Nash is relevant at all, it is just as supportive of Curran's position as the Government's.
The same is true for United States v. Duncan, 42 F.3d 97, 104 (2d Cir. 1994), which dealt with whether a bank fraud prosecution revolving around the purchase and sale of land violated the ex post facto clause. The defendant argued his conviction was unconstitutional because the land purchase occurred before Congress enacted the bank fraud statute. Id. The Second Circuit rejected his argument and held there was no ex post facto violation because the "central purpose" of the fraudulent scheme was not complete until the defendant and his co-conspirators sold the land, which occurred after the statute's enactment. Id. ("[T]he scheme was not fully executed until [defendant] and his coconspirators reaped a profit from the transactions."). In context, Duncan is consistent with De La Mata, Jaynes, Reitmeyer, and Anderson in recognizing that the "central purpose" of most fraud schemes is to obtain money, and thus a scheme is not "fully executed" until this occurs. See Reitmeyer, 356 F.3d at 1323 n.12. As applied here, Duncan provides no support for the Government's position because the "central purpose" of the conduct charged against Curran in Counts 1 and 2 was achieved when she obtained money in November 2009 and December 2010, respectively.
The Court recognizes that Duncan referred, in passing, to "continuing offenses such as conspiracy and bank fraud . . ." 42 F.3d at 104. As the Eleventh Circuit explained in De La Mata, the Second Circuit "cited exclusively to conspiracy cases as support for that proposition," which was dicta anyway given that the defendant conceded the point. 266 F.3d at 1289. De La Mata therefore concluded that Duncan and another case that "loosely" referred to bank fraud as a "continuing" offense were better understood as "demonstrat[ing] not that bank fraud is a continuing offense, but that a single bank fraud scheme can be executed multiple times." Id. at 1289-90; see also Reitmeyer, 356 F.3d at 1323 n.12 (interpreting Duncan to be consistent with the conclusion that each execution of a scheme is a completed offense); Jaynes, 75 F.3d at 1506 n.12; Jeffrey R. Boles, Easing the Tension Between Statutes of Limitations and the Continuing Offense Doctrine, 7 NW. J. L. & SOC. POL'Y 219, 251 (2012) ("In short, bank fraud, under 18 U.S.C. § 1344 is not a continuing offense, as neither the statutory language nor the nature of the crime satisfies the first or second prongs of the Toussie test, respectively.").
The Court agrees with the thoughtful analysis in De La Mata and Reitmeyer. More importantly, the Court concludes, based on Askia, that the Eighth Circuit would agree with it, too. The cases that describe bank fraud as a "continuing offense" usually have not done so after careful review of the continuing offense doctrine, but rather as shorthand to recognize that bank fraud schemes sometimes involve multiple steps occurring over time before they are fully executed. See Reitmeyer, 356 F.3d at 1323 ("None of the cases cited by the government apply the Toussie analysis [under the continuing offense doctrine] . . . An offense may begin, continue, or end in different locations without qualifying as a 'continuing offense' for statute of limitations purposes."). The Court therefore does not interpret these cases to mean that when a defendant engages in repeated but discrete acts of theft or embezzlement as part of a single scheme, the statute of limitations does not start running until the last act of theft or embezzlement occurs. Instead, each instance of theft or embezzlement must be treated as a completed offense for which the statute of limitations starts running immediately. See Askia, 893 F.3d at 1118-19; Reitmeyer, 356 F.3d at 1323.
To hold otherwise would undermine the Supreme Court's and Eighth Circuit's admonition that offenses should be treated as "continuing" only in narrow circumstances. See Askia, 893 F.3d at 1119 (discussing Toussie, 397 U.S. at 115, 121, 90 S.Ct. 858). As Askia explains, a statute of limitations "not only encourages timely prosecutions when the facts are fresh and recollections collected, but also discourages prosecutions for 'acts in the far-distant past.' " 893 F.3d at 1119 (quoting Toussie, 397 U.S. at 114-15, 90 S.Ct. 858). This case illustrates the point: according to the Government, it could have waited until 2029 to prosecute Curran for discrete acts of theft that occurred twenty years earlier. Indeed, by the Government's logic, it still has six-plus years to investigate and prosecute Curran for acts dating all the way back to the beginning of her employment in April 1990, more than thirty years ago. This is startling. The Court cannot imagine it is what Congress had in mind when it criminalized "scheme[s] or artifice[s]" to defraud and stated, in straightforward language, that an indictment must be filed "within 10 years after the commission of the offense." 18 U.S.C. § 3293; see also De La Mata, 266 F.3d at 1289 (rejecting argument that would have tolled statute of limitations for ninety-nine years).
For these reasons, the Court GRANTS Curran's motion to dismiss Counts 1 and 2 of the Indictment.
III. CONCLUSION
The Court DENIES Defendant's motion to consolidate but GRANTS her motion to dismiss Counts 1 and 2.
IT IS SO ORDERED.