U.S. v. Flood

• Decision Date: 04 April 2011
• Docket Number: No. 10–4105.,10–4105.
• Citation: 635 F.3d 1255
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Frances M. FLOOD, Defendant–Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

635 F.3d 1255

UNITED STATES of America, Plaintiff–Appellee,

v.Frances M. FLOOD, Defendant–Appellant.

No. 10–4105.

United States Court of Appeals, Tenth Circuit.

April 4, 2011.

Ronald J. Yengich, (Elizabeth Hunt with him on the briefs), of Yengich, Rich & Xaiz, Salt Lake City, UT, for Defendant–Appellant.D. Loren Washburn, Assistant United States Attorney, (Carlie Christensen, United States Attorney, District of Utah, with him on the brief), Salt Lake City, UT, for Plaintiff–Appellee.Before BRISCOE, Chief Judge, TYMKOVICH and GORSUCH, Circuit Judges.

BRISCOE, Chief Judge.

Frances Flood was convicted by a jury in the United States District Court for the District of Utah of making false or misleading statements to auditors, securities fraud, perjury, and conspiracy to commit securities fraud. Flood filed post-trial motions in the district court asserting: (1) that her convictions for certain offenses were barred by the applicable statute of limitations; and (2) that she received ineffective assistance of counsel because her trial counsel labored under actual conflicts of interest. The district court denied these post-trial motions, and Flood appealed. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the denial of Flood's post-trial motions and remand for the district court to vacate its ruling on the merits of Flood's ineffective assistance of counsel claim so that she may assert this claim in a collateral proceeding under 28 U.S.C. § 2255.

I. BACKGROUND

Flood's convictions stem from her involvement in an alleged improper revenue recognition scheme at ClearOne Communications, Inc. (ClearOne). According to the government, ClearOne, a publicly traded company, engaged in a pattern of shipping product to its distributors at quarter and fiscal year ends in an effort to meet analysts' earnings projections. Because ClearOne allegedly gave its distributors verbal assurances that payment for these quarter and year-end transactions would not be due until the product was subsequently sold to dealers or end users, ClearOne's recognition of revenue on these shipments was improper. During this alleged scheme, Flood served as ClearOne's Chief Executive Officer. However, prior to the initiation of her criminal proceedings, Flood resigned from her employment with ClearOne pursuant to an employment separation agreement, wherein ClearOne agreed to “indemnify Flood for any liability and for all reasonable attorneys' fees and costs incurred by her” in any proceedings that related to this alleged scheme. Aplt.App. at 119–20.

Before the grand jury returned an indictment against Flood for her involvement in this alleged scheme, she executed the Statute of Limitations Tolling and Extension Agreement (S/L Agreement) with the United States Attorney's Office for the District of Utah. Id. at 293–95. In the S/L Agreement, Flood agreed that “she w[ould] not argue that any federal criminal charges [arising out of her activities in connection with ClearOne] ... [were] barred by a statute of limitations which expired any time during the period of June 25, 2007 through July 26, 2007” and that “[t]he period of limitations [applicable to any and all potential federal criminal charges arising out of Flood's activities in connection with ClearOne] that would otherwise expire from June 25, 2007 through July 26, 2007, is tolled and is extended until July 26, 2007.” Id. at 293. The United States Attorney's Office agreed to “afford ... Flood an opportunity for a pre-charging conference to be held.” Id. Further, in the S/L Agreement, Flood asserted that she entered into the agreement “freely and voluntarily” and that she agreed to “waiv[e] the protections of the statue [sic] of limitations ... after full and careful thought, with the advice of counsel, and with a full understanding of ... [her] rights.” Id. at 294.

On July 25, 2007, the grand jury returned an indictment charging Flood with making false statements to auditors, securities fraud, and conspiracy to commit securities fraud. Id. at 303–11. Specifically, in Counts IV and V of this initial indictment, the grand jury charged that Flood engaged in securities fraud “[o]n or about June 29, 2002”, in violation of 15 U.S.C. § 78j(b), 17 C.F.R. § 240.10b–5, 15 U.S.C. § 78ff, and 18 U.S.C. §§ 2(a) and (b). Aplt.App. at 310–11. The grand jury returned a superseding indictment in November 2007 with identical securities fraud charges appearing in Counts V and VI, id. at 313–22, and a second superseding indictment in January 2008 with identical securities fraud charges appearing in Counts V and VI, id. at 324–37.

The second superseding indictment charged Flood with: (1) conspiracy to commit securities fraud in Count I; (2) making false statements to auditors in connection with an audit, review and examination of financial statements in Counts II through IV; (3) securities fraud in Counts V and VI; and (4) perjury in Counts IX through XI. Id. Flood and Susie Strohm, who had served as ClearOne's Chief Financial Officer, were tried as co-defendants in a jury trial. Id. at 1–26. The jury found Flood guilty on all counts on February 27, 2009, id. at 13, and she was sentenced to 48 months' incarceration, id. at 364–66.

After Flood was adjudged guilty, she retained substitute counsel. Id. at 14. Through her substitute counsel, Flood filed two post-trial motions. First, on November 19, 2009, Flood filed a motion to dismiss Counts I through VI of the second superseding indictment, alleging that the applicable statute of limitations barred the prosecution of these offenses. Id. at 280–89. While acknowledging the existence of the S/L Agreement, Flood argued that any purported waiver in the agreement was defective because it did not occur in open court and did not specifically identify the rights waived. Id. Second, on January 26, 2010, Flood filed a motion to vacate all of her convictions, asserting that she received ineffective assistance of counsel during the criminal proceedings because her trial counsel labored under actual conflicts of interest. Id. at 43–63. Specifically, she contended that the arrangement for ClearOne to pay her legal fees created conflicts of interest for her trial counsel and that these conflicts adversely affected her representation. Id.

The government opposed Flood's motions. With regard to the motion to dismiss based on the statute of limitations, the government argued that the S/L Agreement constituted a valid waiver of the statute of limitations. Id. at 298–300. As to the motion to vacate based on the ineffective assistance of counsel, the government argued that the motion was untimely, construing the motion as a filing pursuant to Federal Rule of Criminal Procedure 33, asserting that the motion was not filed within the requisite seven days ¹, and contending that this time limitation could not be extended pursuant to Federal Rule of Criminal Procedure 45 for excusable neglect. Id. at 167–78. In the alternative, the government argued that Flood failed to establish that her trial counsel labored under actual conflicts of interest. Id.

The district court denied Flood's motions. Id. at 349. As to the motion to dismiss based on the statute of limitations, the district court concluded that the S/L Agreement constituted a valid waiver of the applicable statute of limitations. Id. at 353. With regard to the motion to vacate due to the ineffective assistance of Flood's counsel, the district court made two alternative rulings. The district court concluded that Flood's motion was untimely because the motion was not filed within the requisite seven days and the delay was not due to excusable neglect. Id. at 358–60. In the alternative, the district court concluded that Flood's trial counsel “did not labor under a conflict of interest” and that “Flood's representation was in no way compromised.” Id. at 362. Flood appealed the district court's decision denying both of these motions.

II. DISCUSSION

On appeal, Flood argues that the district court erred in denying her motion to dismiss Counts V and VI of the second superseding indictment based on the applicable statute of limitations and in denying her motion to vacate her convictions based on the ineffective assistance of her trial counsel. We affirm the district court's denial of Flood's motion to dismiss based on the applicable statute of limitations. As regards her ineffective assistance of counsel claim, we affirm the district court's ultimate decision to deny her motion to vacate, but not for the reasons stated by the district court. We remand for the district court to vacate its ruling on the merits of her ineffective assistance of counsel claim so that Flood may assert this claim in a collateral proceeding under 28 U.S.C. § 2255.

1. Waiver of the statute of limitations.

This court has held that defendants can expressly waive the bar to prosecution established by the statute of limitations. United States v. Cooper, 956 F.2d 960, 961–62 (10th Cir.1992). We review de novo the question of whether a defendant's express waiver of the statute of limitations is enforceable. See United States v. Leyva–Matos, 618 F.3d 1213, 1217 (10th Cir.2010) (reviewing de novo “the question whether a defendant's waiver of his appellate rights in a plea agreement is enforceable”); see also Cooper, 956 F.2d at 961–63 (applying the de novo standard of review to assess whether defendant's guilty plea waived the statute of limitations).

Flood's convictions on Counts V and VI of the second superseding indictment for securities fraud are based on conduct that occurred “[o]n or about June 29, 2002.” Aplt.App. at 332. The applicable statute of limitations required the government to file the relevant charging documents within five years after the commission of these offenses. 18 U.S.C. § 3282(a). As the initial indictment charging Flood with these offenses was filed on July 25, 2007, after the applicable limitations period had run, Flood contends...