U S v. Smith, Et Al

• Decision Date: 23 September 1999
• Docket Number: 98-5898,98-5894,Nos. 98-5888,98-5895,98-5939,s. 98-5888
• Citation: 197 F.3d 225
• Parties: (6th Cir. 1999) United States of America, Plaintiff-Appellee, v. Robert E. Smith (98-5888); Kathy Burch (98-5894); Raymond Burch (98-5895); Danny Eakles (98-5898); Deborah Eakles (98-5939), Defendants-Appellants. Argued and Submitted:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 225

197 F.3d 225 (6th Cir. 1999)

United States of America, Plaintiff-Appellee, v. Robert E. Smith (98-5888); Kathy Burch (98-5894); Raymond Burch (98-5895); Danny Eakles (98-5898); Deborah Eakles (98-5939), Defendants-Appellants.

Nos. 98-5888, 98-5894, 98-5895, 98-5898, 98-5939

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued and Submitted: September 23, 1999

Decided and Filed: November 24, 1999

Appeal from the United States District Court for the Western District of Kentucky at Bowling Green, No. 97-00006--Joseph H. McKinley, Jr., District Judge.

Terry M. Cushing, ASSISTANT U.S. ATTORNEY, Kent Wicker, Assistant U.S. Attorney, Louisville, Kentucky, for United States.

Brad Coffman, COFFMAN, BECK & LOWE, Bowling Green, Kentucky, for Robert E. Smith.

Wesley Vernon Milliken, MILLIKEN LAW FIRM, Bowling Green, Kentucky, for Kathy Burch

David Goin III, HARRISON & GOIN, Bowling Green, Kentucky, for Deborah Eakles.

Wesley G. Lile, Bowling Green, Kentucky, for Danny R. Eakles.

Gregory G. Injeian, Bowling Green, Kentucky, for Raymond EAppellants. Terry M. Cushing, Kent Wicker, OFFICE OF THE U.S. ATTORNEY, Louisville, Kentucky, for Raymond Earl Burch, JR.

Before: MERRITT and CLAY, Circuit Judges; ALDRICH, District Judge^*.

OPINION

MERRITT, Circuit Judge.

These appeals arise from defendants' convictions for conspiracy to commit mail fraud and wire fraud in violation of 18 U.S.C. §§ 1341, 1343, as well as substantive convictions for mail fraud and wire fraud. Defendants first challenge the indictment, claiming that both the original indictment and a subsequently filed superseding indictment violate the five-year statute of limitations found at 18 U.S.C. § 3282. Second, defendant Robert Smith appeals the district court's denial of his motion to sever and his motion for a mistrial, as well as the district court's decision to admit Amy Payne's testimony as substantive evidence under FRE 803(5), the hearsay exception for past recollections recorded. For the reasons outlined below, we AFFIRM the decision of the district court on all issues.

I.

The defendants, all related by blood or marriage, were co-conspirators in a scheme to defraud insurance companies. Over a three year period, they staged approximately thirty automobile accidents and fictitious slip-and-fall episodes, for which they filed approximately sixty-five insurance claims, collecting $500,000 in insurance proceeds. Insurance investigators' attentions were drawn by "red flags," such as the sheer volume of the accidents, claimed physical pain and suffering highly disproportionate to the automobile damage, and the defendants' relationships to one another. The defendants' last staged accident occurred on January 17, 1992. After that time, the defendants continued to communicate with insurance companies, claiming damages and demanding money, until May 8, 1992.

On February 4, 1997, the Grand Jury returned a five-count indictment against twelve defendants, including appellants. Count 1 of the indictment charged the defendants with conspiracy and wire fraud for the period of February of 1989 until May 8, 1992. However, under the list of "overt acts" in the conspiracy charge, only the staged accidents, the last dated January 17, 1992, were listed. Counts 2, 3, 4 and 5 charged substantive mail and wire fraud violations, and listed the communications continuing until May 8, 1992. Defendants challenged Count 1, claiming that it violated the five-year statute of limitations and should be dismissed. Defendants' motion was denied. Thereafter, on August 5, 1997, a superseding indictment was filed which was identical to the original indictment except for the inclusion of the activities previously listed in Counts 2, 3, 4 and 5 under the "overt acts" heading in Count 1. The defendants then challenged the superseding indictment for violation of the statute of limitations. The District Court found that the superseding indictment did not broaden the charges in the original indictment, and therefore related back to the time of the filing of the original indictment, curing any statute of limitations defect. Following a jury trial, the District Court entered criminal convictions against defendants for the conspiracy charge. The District Court also entered convictions for substantive mail and wire fraud charges against defendants, Kathy and Raymond Burch, which also were appealed. For the reasons listed below, we affirm.

Once an indictment is brought, the statute of limitations does not further run as to the charges in that indictment. United States v. Grady, 544 F.2d 598, 601 (2d Cir. 1976). In this case, the original indictment would have tolled the statute of limitations on February 4, 1997. While the defendants challenge the timeliness of both the original indictment and the superseding indictment on appeal, this challenge fails on the facts of this case. It is clear that the last act in furtherance of the conspiracy occurred on May 8, 1992. In fact, the preamble to Count 1 in the original indictment recited that the conspiracy ended May 8, 1992. Therefore, the original indictment was filed approximately four months within the five-year limitations period. Appellants argue that the statute of limitations deadline was really January 17, 1997, the date of the last "overt act" alleged in Count 1 of the original indictment. We do not agree.

Appellants are correct that normally the date of the last overt act in furtherance of the conspiracy alleged in the indictment begins the clock for purposes of the five-year statute of limitations. See Pinkerton v. United States, 145 F.2d 252 (5th Cir. 1944). The Supreme Court adopted this rule in Brown v. Elliott, 225 U.S. 392, 401 (1912) ("[T]he period of limitation must be computed from the date of the overt act rather than the formation of the conspiracy . . . . [and] must be computed from the date of the last of them of which there is an appropriate allegation and proof.")¹.

In this case, adequate notice to the defendants is not a problem. The original indictment clearly indicated that the conspiracy ran until May 8, 1992. The original indictment named the staged accidents under the Count 1 list of "overt acts," and it also listed the later-occurring communications with the insurance companies under Counts 2, 3, 4, and 5 of the indictment. If it was error to fail to list a few of the acts alleged in Counts 2, 3, 4, and 5 under Count 1, then it was clearly an error of mere form, not of substance. A pleading defect, and nothing more, should not bar the prosecution of the defendants when a reading of the indictment as a whole gives notice that the conspiracy lasted until May 8, 1992.

Second, even if the original indictment was defective on its face, the superseding indictment related back to the filing date of the original indictment for statute of limitations purposes. While this issue appears to be fairly well-settled in other jurisdictions, it presents an issue of first impression for the Sixth Circuit.

Under the oft-quoted rule from United States v. Grady, 544 F.2d 598 (2d Cir. 1976), "[s]ince the statute stops running with the bringing of the first indictment, a superseding indictment brought at any time while the first indictment is still validly pending, if and only if it does not broaden the charges made in the first indictment, cannot be barred by the statute of limitations." Grady, 544 F.2d at 601. See also United States v. Gengo, 808 F.2d 1, 3 (2d Cir. 1986); United States v. Friedman, 649 F.2d 199, 203 (3rd Cir. 1981); United States v. Schmick, 904 F.2d 936, 940 (5th Cir. 1990); United States v. Lytle, 677 F. Supp. 1370, 1376 (N.D. Ill. 1988). Grady and its progeny make it clear that as long as the superseding indictment does not broaden the original indictment, the superseding indictment relates back to the filing of the original indictment even if the superseding indictment is filed outside of the statute of limitations. See Grady, 544 F.2d at 601; Friedman, 649 F.2d at 204; Schmick, 904 F.2d at 940; Lytle, 677 F. Supp. at 1376. Applying this rule to the instant case, the superseding indictment dated August 5, 1997, relates back to the date of the first indictment even though the superseding indictment was issued after May 8, 1997, the last day of the statutory five-year period.

Defendants argue that the original indictment of February 4, 1997, was not "validly pending" and thus the Grady tolling of the limitations period does not apply. Defendants cite, in particular, United States v. Crysopt Corp., 781 F. Supp. 375 (D. Md. 1991), which held that a defective original indictment is a "nullity" and therefore cannot toll the statute of limitations. See Crysopt, 781 F. Supp. at 377-78. The defendants misconstrue what "validly pending" means. Grady holds that an original indictment remains pending until it is dismissed or until double jeopardy or due process would prohibit prosecution under it. See Grady, 544 F.2d at 602 n. 4. "Validly pending" under the Grady rule is unrelated to the issue of whether an indictment is defective or insufficient. See United States v. Drucker, 453 F. Supp. 741, 742 (S.D.N.Y. 1978), aff'd 591 F.2d 1332 (2nd Cir. 1978) (finding that whether or not the original indictment was defective, the indictment served to toll the statute of limitations under the Grady rule). If this were not the case, then the United States would simply dismiss the original indictment and refile under the savings clause of 18 U.S.C. § 3288, which allows the government, after expiration of the statute of limitations period, to refile within six months from the date of dismissal of a defective indictment. See United States v. Charnay, 537 F.2d 341, 355 (9th Cir. 1978) (holding that a dismissal of a defective indictment that failed to state an offense triggered the six month savings clause under § 3288). The case before the court does not fall under the § 3288 line of cases, but rather the Grady line of...