324 F.3d 1158 (10th Cir. 2003), 01-4147, U.S. v. Dunne

Docket Nº:01-4147
Citation:324 F.3d 1158
Party Name:U.S. v. Dunne
Case Date:April 01, 2003
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1158

324 F.3d 1158 (10th Cir. 2003)

UNITED STATES of America, Plaintiff-Appellant,

v.

Terrence DUNNE, Defendant-Appellee.

No. 01-4147.

United States Court of Appeals, Tenth Circuit

April 1, 2003

Page 1159

Stewart C. Walz, Assistant United States Attorney, (Paul M. Warner, United States Attorney, Diana Hagen, Assistant United States Attorney, with him on the brief), Salt Lake City, Utah, for Plaintiff-Appellant.

Donald D. Hackney, Hackney, Hamilton & Carroll, Spokane, Washington, for Defendant-Appellee.

Before BRISCOE, Circuit Judge, BRORBY, Senior Circuit Judge, and MURPHY, Circuit Judge.

MURPHY, Circuit Judge.

I. INTRODUCTION

The United States appeals from the district court's dismissal of a superseding indictment charging defendant Terrence Dunne ("Dunne") with making a false statement within the jurisdiction of the Securities and Exchange Commission ("SEC"), in violation of 18 U.S.C. § 1001. The district court dismissed the indictment for failure to charge within the applicable five-year statute of limitations. This court exercises jurisdiction pursuant to 28 U.S.C. § 1291 and affirms, concluding that while a violation of 18 U.S.C. § 2(b) is implicit in every charge, the charged offense is barred by the statute of limitations. Moreover, this court concludes that a violation of 18 U.S.C. § 1001 is not a continuing violation for statute of limitations purposes.

II. BACKGROUND

Dunne was engaged by PanWorld Minerals International, Inc. ("PanWorld") to perform PanWorld's financial audit for the calendar year 1993. On April 11, 1994, Dunne completed the audit of PanWorld, signed the audit report, and mailed the audited financial statements and the audit report to PanWorld. PanWorld mailed a Form 10-K Report, which included the audit report and audited financial statements, to the SEC on April 29, 1994. The

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SEC received the Form 10-K Report on May 4, 1994.

On April 28, 1999, a Utah federal grand jury returned a superseding, five-count indictment against Robert Weeks ("Weeks"), the president and principal executive officer of PanWorld; David Hesterman ("Hesterman"), a PanWorld consultant; and Dunne arising out of their activities in connection with PanWorld. Counts I through III of the indictment involved only Weeks and Hesterman and are not relevant to this appeal. Count IV of the indictment charged Weeks and Hesterman with violations of the Securities Exchange Act by falsely stating in PanWorld's 1993 Annual Report filed with the SEC that the company had acquired an interest in a project in Montana known as Washington Gulch Placer Project.

Count V, the only count naming Dunne, began by "realleg[ing] and incorporat[ing]" relevant factual allegations of Counts I, III, and IV. Count V further alleged that

3. Defendant TERRENCE DUNNE audited the financial statements included in PanWorld's 1993 annual report. DUNNE signed an audit opinion for the 1993 financial statements stating his audit of PanWorld was done in accordance with generally accepted auditing standards (GAAS) and the financial statements were presented in accordance with generally accepted accounting principles (GAAP). However, DUNNE knew from the terms of the October 31, 1993 contract that PanWorld acquired no interest in Washington Gulch, and therefore, knew that the financial statements were not presented in accordance with GAAP. DUNNE took no steps to satisfy the requirements of generally accepted auditing standards to determine if the Washington Gulch interest was properly included in the PanWorld financial statements, and the defendant DUNNE did not acquire competent evidential matter as required by GAAS that showed the acquisition of the Washington Gulch interest by PanWorld on October 31, 1993.

4. On or about May 4, 1994, in the Central Division of the District of Utah, and elsewhere, TERRENCE DUNNE, in a matter within the jurisdiction of the SEC, an independent agency of the Executive Branch of the United States, did make a materially false, fictitious, and fraudulent statement and representation in that the defendant TERRENCE DUNNE did certify that the financial statements for [PanWorld] for the year ending December 31, 1993 were presented in accordance with generally accepted accounting principles (GAAP), and audited in accordance with Generally Accepted Auditing Standards (GAAS), when, as the defendant then and there well knew, such was not the case; all in violation of 18 U.S.C. § 1001.

Dunne moved to dismiss Count V of the superseding indictment on the grounds that it was barred under the five-year statute of limitations. 18 U.S.C. § 3282 (establishing a five-year statute of limitations for noncapital offenses). Dunne argued that the statute of limitations began to run when he mailed the audit report to PanWorld on April 11, 1994 and thus expired before the April 28, 1999 indictment was filed. The government opposed Dunne's motion, arguing that the superseding indictment was timely because: (1) the charged crime was not complete until the documents containing the false statements were actually submitted to the SEC on April 29, 1994; and (2) the crime charged in the indictment was the "republication" of the financial statements by PanWorld when it submitted them to the SEC.

The district court referred the case to a magistrate judge pursuant to 28 U.S.C. § 636(b)(1)(B).

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In recommending that Dunne's motion be denied, the magistrate judge agreed with the government that the charged crime was not complete until the false statement was sent by PanWorld to the SEC. Focusing on the elements of the charged offense, the magistrate judge noted there were two elements relating to the time when the offense was committed. The magistrate judge concluded that the first element, i.e., the making of a false statement, occurred on April 11, 1994 when Dunne submitted the audit report and the audited financial statements to PanWorld. As for the second temporal element, i.e., that the false statement concern a matter within the jurisdiction of an agency of the United States, the magistrate judge concluded that this occurred on April 29, 1994 when PanWorld mailed the Form 10-K Report, including Dunne's false statements, to the SEC. The magistrate judge concluded that because the superseding indictment was returned on April 28, 1999, it was timely under 18 U.S.C. § 3282.

Dunne objected to the magistrate judge's report and recommendation, arguing that the SEC had jurisdiction over him when he signed and mailed the audit report to PanWorld on April 11, 1994. Dunne also argued that when he was engaged in March 1994 by PanWorld to perform the audit, the SEC obtained jurisdiction over him.

The government responded to Dunne's objections, arguing that the charged crime was not completed upon Dunne's signing and mailing the audit reports to PanWorld because, without submission to the SEC, there is no potential the false statements could impede a governmental function...

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