For Whom the Statute Tolls: Challenges to FCPA Indictment May Expose Government Vulnerabilities in International Cases
As companies grow and expand their international footprint, their operations are scrutinized with increasing frequency by federal prosecutors. However, recent pre-trial litigation in a FCPA case suggests that one important government tool may be vulnerable to challenge by sophisticated defense counsel, which could stifle the government’s ability to build and bring a criminal case beyond the normal five-year limitations period, provided the defense can show that the government’s mutual legal assistance request to another country was pretextual in nature.
Tolling the Statute of Limitations Under 18 U.S.C. § 3292
In order to toll the statute of limitations in a criminal case, federal prosecutors typically send a request for foreign evidence through a bilateral Mutual Legal Assistance Treaty, through the U.N. Convention Against Corruption (“UNCAC”), or through a letter rogatory. After sending a formal request, prosecutors will file a motion to toll the limitations period for up to three years under 18 U.S.C. § 3292. Section 3292 has two requirements: first (1), the government must file the motion requesting that the statute of limitations be tolled, “before return of an indictment”, indicating that evidence of an offense is in a foreign country; and second (2), the government must prove by a preponderance of the evidence that an official request for the evidence was sent to the foreign government, and that it reasonably appeared at the time of the request that the evidence was in the foreign country.
Recent pretrial litigation in a Foreign Corrupt Practices Act (“FCPA”) case demonstrates the operation of Section 3292 in practice. In United States v. Ripalda,1 the government alleged that the defendant, Frank Chatburn Ripalda, bribed foreign officials in violation of the FCPA and illegally laundered money related to these payments. One of the money laundering counts stemmed from a wire transfer sent from an account in the Cayman Islands to the United States in February 2013. Ripalda argued that the five-year statute of limitations period on the money laundering count had lapsed, and that the count therefore should be dismissed.2 In response, the government countered that the limitations period had been extended by virtue of the government’s UNCAC request for bank account and financial records from Panama.3
The question for the court was whether the limitations period should toll for a money laundering count involving a wire transfer between the Cayman Islands and the United States, when the government sought evidence from a third country. Specifically, Ripalda argued that the government’s request from Panama sought mere “circumstantial” evidence that was not needed to prove a crime, and only a request to the Cayman Islands would have been appropriate for tolling purposes under the statute.4 In response, the government argued that the statute only required that it seek “evidence of an offense” which “is in a foreign country,” and the Panamanian evidence was, in fact, relevant, because Panamanian bank records showed that the defendant had sent other bribe payments from the Cayman account to the Panamanian account, and thus, the wire transfer at issue was “not a mistake.”5
The magistrate judge in Ripalda ultimately found that the government had the better of the argument in this case,6 but the case is the most recent example of a defendant challenging tolling orders in international cases. In fact, several courts have implicitly recognized the argument at the heart of Ripalda’s motion: namely, that if the government did not seek foreign evidence in good faith, then Section 3292 should not apply and the limitations period should not be extended. For example, in United States v. Atiyeh, 402 F.3d 354 (3d Cir. 2005), the Third Circuit held that the statute of limitations should not be tolled pursuant to Section 3292 where the government had already received the evidence it requested from foreign governments prior to filing its Section 3292 application with the district court. The government argued that Section 3292 should be applicable where evidence “is or was” in a foreign country, and that the statute of limitations should be tolled, regardless of when the government received the evidence, because the government might require time to review the evidence acquired from foreign countries. Id. at 365. The Third Circuit disagreed, holding that Section 3292 only applied if the evidence the government sought was located abroad at the time the request was made. Id. at 363. As the court explained, allowing the government to toll the statute simply because the evidence had, at some time, been in a foreign country “would eviscerate the plain intent of Congress.” Id. at 367.
Similarly, in United States v. Trainor, 376 F.3d 1325 (11th Cir. 2004), the Eleventh Circuit affirmed a District Court order dismissing several counts of an indictment as untimely where the government’s application pursuant to Section 3292 failed to prove, by the preponderance of the evidence, that the materials it sought were located in a foreign country. The government’s request to toll the statute of limitations contained only a short paragraph describing evidence already in its possession that suggested more evidence could be found in Switzerland. Id. at 1333. It did not contain any affidavits or verified statements regarding the requested evidence. Id. Though the court recognized that the evidence tended to show that a request to Switzerland had been made, it did not show that the requested evidence was likely to actually be in Switzerland. Id. Accordingly, the Eleventh Circuit affirmed the dismissal of the counts as untimely. Id. at 1334.
Finally, in US v. Kozeny, 541 F.3d 166 (2d Cir. 2008) the Second Circuit held that an application under Section 3292 must be filed with the district court before the statute of limitations has run or the count is time-barred. In Kozeny, the government submitted its mutual legal assistance requests for evidence to the foreign governments before the applicable five-year statute of limitations had run on various counts of an indictment, but the government failed to file a motion to toll the statute of limitations period under Section 3292 with the district court until the limitations period had already run on these counts. Id. at 169. The government argued that, because Section 3292 tolls the statute of limitations from the time the requests to the foreign government are made, it did not matter that the statute had run by the time the government made its request to the district court. Id. at 173. But the Second Circuit disagreed, declining to follow earlier decisions in the Ninth Circuit and District Court for the District of Columbia,7 and held that the plain language of Section 3292, which allows the district court to “suspend the running” of the statute of limitations, could only mean that the limitations period must be running at the time the application was made in order to “suspend” it. Id. at 172. Any contrary reading would “revive” an already expired limitations period. Id. Thus, at least in the Second Circuit, while a timely Section 3292 application made to the district court will retroactively suspend the running of a statute of limitations from the time the request to the foreign government was made, an untimely request will not, even if the request to the foreign government was made within the limitations period.
What This Means for You
Given the increased frequency of FCPA enforcement and money laundering cases involving international transactions, companies and individuals would be well served to carefully examine the basis of a government investigation into dated conduct to ensure that the limitations period was suspended on proper grounds. Although the Ripalda Court found no wrongdoing on the part of the government in the most recent case, there may be other cases where the government used Section 3292 merely to extend limitations periods without a good faith reason or need to obtain evidence abroad, or made an untimely request to the district court to suspend the limitations period under the statute, and, if so, a defendant may be in a good position to challenge the government’s application and have a case or certain counts dismissed as untimely.
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1 United States v. Ripalda, 18-cr-20312-MGC-1 (S.D. Fla).
2 Id. at ECF 126 (“Defendant’s Motion to Dismiss Count 4 of Indictment”).
3 Id. at ECF 141 (“Government’s Response”).
4 Id. at ECF 148 (“Defendant’s Reply”) at *3-4.
5 Government’s Response at *5, 9.
6 Id. at ECF 159 (“Report and Recommendations on Def.’s Mot. To Dismiss Count 6 of the Superseding Indictment”).
7 See United States v. Bischel, 61 F.3d 1429 (9th Cir. 1995); United States v. Neill, 940 F. Supp. 332 (D.D.C.), vacated on other grounds, 952 F. Supp. 831 (D.D.C.1996).
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.