U.S. v. Reitmeyer

Citation356 F.3d 1313
Decision Date04 February 2004
Docket NumberNo. 02-5151.,02-5151.
PartiesUNITED STATES of America, Plaintiff-Appellant, v. Douglas REITMEYER; Don Sparkman; James Alton Watson; Daniel Joseph Eaton; James Roger Craddock; North American Construction Corporation; Evi Charrington Environmental, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Richard A. Friedman (David E. O'Meilia, United States Attorney; Kenneth P. Snoke, Assistant United States Attorney; Douglas A. Horn, Assistant United States Attorney, Tulsa, OK, with him on the briefs), Department of Justice, Washington, D.C., for Plaintiff-Appellant.

R. Thomas Seymour (C. Robert Burton, IV, of Seymour Law Firm, Tulsa, OK, with him on the brief for Defendant-Appellee Reitmeyer; James C. Lang, G. Steven Stidham, and Brian S. Gaskill of Sneed Lang, P.C., Tulsa, OK, on the brief for Defendant-Appellee James Alton Watson; John E. Dowdell and Marichiel A. Lewis of Norman Wohlgemuth Chandler & Dowdell, Tulsa, OK, on the brief for Defendant-Appellee Joseph Eaton; William G. Rosch III of Rosch & Ross, Houston, TX, on the brief for Defendant-Appellee James Roger Craddock; Burck Bailey and Warren F. Bickford of Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, OK, adopted by reference briefs of all Defendants-Appellees, for Defendant-Appellee Don Sparkman), of Seymour Law Firm, Tulsa, OK, for Defendants-Appellees.

Before O'BRIEN, Circuit Judge, BRORBY, Senior Circuit Judge, and LUNGSTRUM, District Judge.*

BRORBY, Senior Circuit Judge.

The government appeals the district court's dismissal of its indictment on statute of limitations grounds. The indictment charged certain companies and five company officers with "execut[ing] and attempt[ing] to execute a scheme to defraud the United States and to obtain money from the United States by false pretenses" in violation of the Major Fraud Act, 18 U.S.C. § 1031(a). Exercising jurisdiction under 18 U.S.C. § 3731 and 28 U.S.C. § 1291, we affirm.1

I. Background

We recite the following factual allegations as they appear in the superseding indictment. The United States Army Corps of Engineers awarded North American Construction Corporation a fixed price contract to construct a groundwater treatment facility. Part of the construction required drilling wells, which North American subcontracted to CH & A Corporation. CH & A, in turn, subcontracted the "horizontal" well drilling portion of the contract to EVI Cherrington Environmental, Inc.

EVI drilled the horizontal wells but experienced cost overruns. In order to recover these additional costs, North American, with the aid of EVI and CH & A, submitted a certified claim for equitable adjustment to the chief contracting officer of the Corps on May 16, 1994. The companies sought almost $ 4 million, claiming the geological conditions encountered during drilling "were different than those represented by the government's specification on which EVI had based their [sic] bid." According to the companies' claim, the Corps' misrepresentations "caused the project to run longer than had been anticipated" and caused the companies to incur the "excess costs." The companies met with the Corps on June 28, 1995, "to promote and support" their claim.

On February 15, 2002, over seven years after the companies initially filed their claim, the government filed an indictment in district court, and later filed a superseding indictment, charging the companies and certain of their officers (collectively "the Companies") with "execut[ing] and attempt[ing] to execute a scheme to defraud the United States and to obtain money from the United States by means of false pretenses" in violation of the Major Fraud Act. See 18 U.S.C. § 1031(a). The indictment alleged the Companies submitted a "false Claim for Equitable Adjustment." It asserted the Companies knew "there were no material differences between [the Corps'] representations in the bid package and the actual conditions encountered." It also alleged the Companies intentionally withheld from their claim a report prepared by EVI concluding the Corps provided information that "would have correctly warned a prospective horizontal driller of the hard drilling conditions ultimately encountered."

In response, the Companies filed motions to dismiss the indictment, arguing "the statute of limitations for the charged offense expired before the original Indictment was returned." The relevant statute of limitations requires the government to commence a prosecution within seven years after an offense is committed. See 18 U.S.C. § 1031(f). Since the government returned the indictment more than seven years after the Companies filed the claim for equitable adjustment, the Companies argued the "action was commenced outside the limitations period, and therefore, must be dismissed."

The district court agreed with the Companies' argument and concluded the statute of limitations began running when the Companies filed their claim for equitable adjustment on May 16, 1994. The district court therefore concluded the government commenced its prosecution outside of the limitations period by returning the indictment roughly nine months after the limitations period expired. (Apt.App. at 139.) As a result of these conclusions, the district court granted the Companies' motions and dismissed the indictment. The government appeals.2

II. Discussion

On appeal, the government argues the district court incorrectly dismissed the indictment on statute of limitations grounds. We review this question de novo. United States v. Thompson, 287 F.3d 1244, 1248-49 (10th Cir.2002); Foutz v. United States, 72 F.3d 802, 804 (10th Cir.1995). We test the indictment "solely on the basis of the allegations made on its face, and such allegations are to be taken as true." United States v. Hall, 20 F.3d 1084, 1087 (10th Cir.1994).

The statute of limitations under the Major Fraud Act states: "A prosecution of an offense under this section may be commenced any time not later than 7 years after the offense is committed, plus any additional time otherwise allowed by law." 18 U.S.C. § 1031(f). "[C]riminal statutes of limitation are to be liberally interpreted in favor of repose." United States v. Marion, 404 U.S. 307, 323 n. 14, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971). "Statutes of limitations normally begin to run when the crime is complete." Pendergast v. United States, 317 U.S. 412, 418, 63 S.Ct. 268, 87 L.Ed. 368 (1943). "A crime is complete as soon as every element in the crime occurs." United States v. Payne, 978 F.2d 1177, 1179 (10th Cir.1992) (quotation marks and citation omitted).

Under the principles discussed above, the statute of limitations began running in this case when the Companies first "committed" or completed an offense under the Major Fraud Act. In order to determine when the Companies committed an offense, however, we must first determine what constitutes an offense under the Act.

In relevant part, the Act prescribes fines and imprisonment under certain circumstances for "[w]hoever knowingly executes, or attempts to execute, any scheme or artifice with the intent — (1) to defraud the United States; or (2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1031(a).3 Under the plain language of the Act, an offense is each knowing "execut[ion]" or "attempt[ed] execut[ion]" of a scheme or artifice to defraud or obtain money by false pretenses. Id. Each act in furtherance of a scheme does not constitute a separate offense, see United States v. Sain, 141 F.3d 463, 473 (3d Cir.), cert. denied, 525 U.S. 908, 119 S.Ct. 248, 142 L.Ed.2d 204 (1998); however, the Act contemplates prosecution of multiple counts when there are multiple "executions" of a single scheme, see 18 U.S.C. § 1031(c) (imposing a maximum fine for "a prosecution with multiple counts under this section"). This reading of the Act is consistent with this and other circuits' interpretation of the nearly identical language found in the bank fraud statute, 18 U.S.C. § 1344.4 See United States v. De La Mata, 266 F.3d 1275, 1287 (11th Cir.2001), cert. denied, 535 U.S. 989, 122 S.Ct. 1543, 152 L.Ed.2d 469 (2002); United States v. Colton, 231 F.3d 890, 908-09 (4th Cir.2000); United States v. Bruce, 89 F.3d 886, 889 (D.C.Cir.1996); United States v. Harris, 79 F.3d 223, 232 (2d Cir.), cert. denied, 519 U.S. 851, 117 S.Ct. 142, 136 L.Ed.2d 89 (1996); United States v. Longfellow, 43 F.3d 318, 323 (7th Cir.1994), cert. denied, 515 U.S. 1122, 115 S.Ct. 2277, 132 L.Ed.2d 281 (1995); United States v. Wall, 37 F.3d 1443, 1446 (10th Cir.1994); United States v. Molinaro, 11 F.3d 853, 860 (9th Cir.1993); United States v. Lilly, 983 F.2d 300, 304 (1st Cir.1992); United States v. Heath, 970 F.2d 1397, 1402 (5th Cir.1992); United States v. Schwartz, 899 F.2d 243, 248 (3d Cir.1990).

Although the Act criminalizes each knowing "execution" or "attempted execution" of a scheme, the Act does not define these terms. Nevertheless, case law interpreting the term "execution" in the bank fraud context provides some guidance. In determining what constitutes an "execution," a court should first "`ascertain the contours of the scheme.'" Wall, 37 F.3d at 1446 (quoting United States v. Rimell, 21 F.3d 281, 287 (8th Cir.1994)). A court should then determine the conduct necessary to "execute" or complete the scheme. Id. "[W]hether [conduct] is an `execution' of the scheme or merely a component of the scheme will depend on several factors including the ultimate goal of the scheme, the nature of the scheme, the benefits intended, the interdependence of the acts, and the number of parties involved." De La Mata, 266 F.3d at 1288. Other factors the court may consider include whether the conduct created a "new and independent" financial risk, United States v. Allender, 62 F.3d 909, 913 (7th Cir.1995), cert. denied, 516 U.S. 1076, 116 S.Ct. 781, 133 L.Ed.2d 732 (1996); De...

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