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United States v. Swartzendruber

February 25, 2009

UNITED STATES OF AMERICA, PLAINTIFF,
v.
VERLIN D. SWARTZENDRUBER, A/K/A TC, A/K/A JOSEPH SEVERIN, DEFENDANT.



The opinion of the court was delivered by: Ralph R. Erickson, District Judge United States District Court

MEMORANDUM OPINION AND ORDER ON MOTION TO DISMISS INDICTMENT

INTRODUCTION

Before the Court is Defendant's motion to dismiss the indictment, or alternatively, motion to dismiss Count 10 of the indictment (Doc. #30). Defendant filed a memorandum of law and reply memorandum in support of his arguments (Doc. #30, #45). The United States filed a memorandum in opposition to the motion (Doc. #44). The Court, having considered all of the briefs and documents filed by the parties, now issues this memorandum opinion and order.

SUMMARY OF DECISION

The March 2005 Order of this Court tolled the statute of limitations for all offenses alleged in the indictment; therefore, Defendant's motion to dismiss on the grounds that the indictment or alleged offenses are time-barred is DENIED. The Court further concludes that the United States' ex parte application under 18 U.S.C. § 3292 complied with the statute and does not violate due process; therefore, Defendant's motion to dismiss on these grounds is also DENIED.

FACTUAL BACKGROUND

An arrest warrant was first issued for Defendant on November 14, 2006, after the United States presented a complaint to the magistrate judge. On December 6, 2006, Defendant was indicted on six counts of wire fraud, three counts of money laundering, conspiracy to defraud the United States, and conspiracy to commit money laundering. There is also a forfeiture allegation. The offenses are alleged to have occurred primarily between July 1999 and April 2001, with the exception of the tax fraud count, which is alleged to have occurred from July 1999 to the date of the indictment. After the indictment was returned, another arrest warrant was issued.

Defendant is alleged to be the head of Preferred Group Ltd., a St. Vincent corporation, with offices in St. Vincent and Grenada, West Indies. He is also alleged to have served as the head of Preferred Trust and Management Ltd., a Grenada corporation, with offices in St. Vincent and Grenada, West Indies. On June 26, 2008, Defendant was arrested in Laredo, Texas. It was believed that Defendant was residing outside of the country when the arrest warrant was issued in 2006. He was arrested when he returned to the United States in 2008.

According to the United States, investigation by the grand jury of the alleged "Prime Bank" scheme involving Defendant began as early as January 2003. The investigation not only focused on Defendant, but also Frederick Keiser, Jr., a licensed North Dakota commodities broker, who was believed to be participating in concert with or aiding and abetting Defendant. Frederick Keiser, Jr. was indicted separately on June 8, 2005. The charges against him included ten counts of wire fraud, nine counts of money laundering, conspiracy to defraud the United States, and conspiracy to commit money laundering. On March 16, 2007, Keiser was found guilty after a jury trial on all counts. He was sentenced to 144 months imprisonment. Keiser has appealed to the Eighth Circuit Court of Appeals. His appeal is pending.

In addition, Byron Swartzendruber, Defendant's son, was indicted in September 2007 for conspiracy to defraud the United States with regard to the same alleged "Prime Bank" scheme. Trial for Byron Swartzendruber was scheduled to begin on July 21, 2008. The United States and Byron Swartzendruber mutually resolved the charge before trial.

Before any of the alleged conspirators were indicted, the United States applied to the Court pursuant to 18 U.S.C. § 3292 for an ex parte order suspending the statute of limitations to permit the United States to obtain foreign evidence. In an Order dated March 21, 2005,*fn1 ("tolling Order") the Court granted the application and stated:

That the running of the statute of limitations for the listed offenses for the period identified in the sworn application of the United States begins on October 7, 2002, and continues until the date in which the Costa Rican authorities, Bahamian authorities, and Swiss authorities, take final action on the United States' requests by delivering a complete response to the United States[.]

Defendant has moved to dismiss the indictment as time-barred, arguing the tolling Order on its face does not toll the statute of limitations for the listed offenses and does not toll the tax fraud charge (Count 10) because it was not specifically listed in the application or tolling Order. He also raises several additional issues regarding the manner in which the tolling Order was obtained and whether there was compliance with the statute. Each issue is addressed below.

ANALYSIS

Defendant's primary argument is the tolling Order does not toll or suspend the statute of limitations as contemplated by 18 U.S.C. § 3292. He argues the Order instead provides for the "running" of the statute of limitations, or, at the very least, the Order is ambiguous and the rule of lenity requires that the Order be construed in his favor.

Statutes of limitations in criminal cases normally begin to run when the crime is "complete." Pendergast v. United States, 317 U.S. 412, 418 (1943). With respect to conspiracy offenses, the United States must prove at least one overt act that occurred within the statute of limitations. United States v. Dolan, 120 F.3d 856, 864 (8th Cir. 1997). If the indictment is not filed by the last day of the statute of limitations, then the indictment will be time-barred unless the United States can establish that it effectively tolled the statute of limitations.

The Eighth Circuit has not yet interpreted 18 U.S.C. § 3292. Nevertheless, a few other circuits and district courts have had occasion to analyze this statute in several different contexts. The Court has studied these decisions for guidance in this case.

A. The Language and Purposes of 18 U.S.C. § 3292

Prosecutors investigating financial crimes involving offshore banks used to launder the proceeds of criminal activities or to evade taxes face difficulties obtaining information. United States v. Davis, 767 F.2d 1025, 1037-38 (2d Cir. 1985). To ease some of the difficulties, Congress enacted 18 U.S.C. § 3292, which allows a federal prosecutor to toll the statute of limitations while an official request to a foreign government for evidence is pending. Id. Section 3292, of Title 18, provides, in relevant part:

(a) (1) Upon application of the United States, filed before return of an indictment, indicating that evidence of an offense is in a foreign country, the district court before which a grand jury is impaneled to investigate the offense shall suspend the running of the statute of limitations for the offense if the court finds by a preponderance of the evidence that an official request has been made for such evidence and that it reasonably appears, or reasonably appeared at thetime the request was made, that such evidence is, or was, in such foreign country.

(b) Except as provided in subsection (c) of this section, a period of suspension under this section shall begin on the date on which the official request is made and end on the date on which the foreign ...


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