U.S. v. Srulowitz, 775

• Decision Date: 15 May 1987
• Docket Number: No. 775,D,775
• Parties: UNITED STATES of America, Appellant, v. Abraham SRULOWITZ, Defendant-Appellee. ocket 86-1446.
• Court: U.S. Court of Appeals — Second Circuit

Page 37

819 F.2d 37

UNITED STATES of America, Appellant, v. Abraham SRULOWITZ, Defendant-Appellee.

No. 775, Docket 86-1446.

United States Court of Appeals, Second Circuit.

Argued Feb. 10, 1987.

Decided May 15, 1987.

Peter A. Norling, Asst. U.S. Atty., Brooklyn, N.Y. (Andrew J. Maloney, U.S. Atty., E.D.N.Y., Jane Simkin Smith, Sp. Asst. U.S. Atty., Brooklyn, N.Y., of counsel) for appellant.

Nathan Z. Dershowitz, New York City (Victoria B. Eiger, Dershowitz & Eiger, P.C., New York City, Alan M. Dershowitz, Cambridge, Mass., of counsel) for defendant-appellee.

Before LUMBARD, KEARSE and MINER, Circuit Judges.

MINER, Circuit Judge:

The government appeals from an order entered in the United States District Court for the Eastern District of New York (Glasser, J.) dismissing an indictment charging defendant-appellant Abraham Srulowitz in one count with violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1961 et seq. (1982 & Supp. III 1985). The district court held that the indictment was not found within the five-year limitations period fixed by 18 U.S.C. Sec. 3282 (1982). The court determined that the indictment was found on the date it was unsealed rather than on the date it was filed. This determination was predicated solely upon the lack of a contemporaneous record of the government's application to the Magistrate for sealing. Finding no requirement for a contemporaneous record of proceedings relating to the sealing of an indictment, we reverse and remand to the district court to decide, in accordance with our prior remand, whether

the sealing was informed by proper prosecutorial objectives.

BACKGROUND

The two-count indictment originally returned against Srulowitz charged him with the RICO violation in count one and mail fraud, in violation of 18 U.S.C. Sec. 1341 (1982), in count two. The indictment was handed up on May 11, 1983 and was ordered sealed on the same day by Magistrate Scheindlin at the request of Assistant United States Attorney Max Sayah, now a Judge of the Criminal Court of the City of New York. No record was made of the proceedings before the Magistrate, and no papers in support of the application for sealing were submitted. According to the testimony of Judge Sayah at the hearing below, it was the normal practice of the United States Attorney's office not to give any explanation for such a request, and reasons for the sealing "probably" were not presented to the Magistrate in this case.

On July 12, 1983, the indictment was unsealed and Srulowitz was arraigned. In the RICO charge alleged in count one of the indictment, Srulowitz was accused of participating in an arson-for-profit scheme involving the burning of four sets of properties in order to collect the proceeds of fire insurance. In the mail fraud charge alleged in count two of the indictment, Srulowitz was accused of causing a letter to be mailed on September 23, 1978 in furtherance of the arson scheme. Following a jury trial, Srulowitz was convicted on both counts and sentenced to six years' imprisonment on count one and five years' probation on count two.

On appeal, a panel of this Court reversed the conviction on count two, finding that there was no proof of mailing of a letter on September 23, 1978, and remanded for a new trial on count one because the government had withheld exculpatory material. United States v. Srulowitz, 785 F.2d 382 (2d Cir.1986). With the elimination of the September 23, 1978 mailing as a predicate for racketeering activity, the panel also recognized the viability of a statute of limitations defense on remand, since a letter allegedly mailed on June 6, 1978 in connection with the scheme was the last timely predicate act:

The question for decision on remand is what date should be considered the date the indictment was "found" within the meaning of Sec. 3282. If that date is the date on which the indictment was returned, the RICO count as pleaded is not barred by the statute of limitations because the alleged mailing of the June 6, 1978 letter occurred less than five years before the May 11, 1983 return. If, however, the date on which the indictment is "found" is considered to be the date on which the indictment was unsealed, i.e., July 12, 1983, the RICO count must be dismissed because the alleged June 6, 1978 mailing occurred more than five years prior to that date.

Id. at 390-91. The panel noted that, where sound discretion dictates the sealing of an indictment, the date of return, rather than the date of unsealing, is controlling for statute of limitations purposes. It concluded that "[s]uch an exercise of discretion may be warranted for a number of proper prosecutorial purposes or where the public interest otherwise requires the sealing." Id. at 391.

On remand, the district court conducted a hearing to determine whether there was a sound basis to seal the indictment. The government argued that it was constrained to conceal the fact that Srulowitz was indicted while it attempted to locate him and to secure the cooperation of a crucial witness. In support of its argument, the government adduced testimony from Judge Sayah and Special Agent Frank Napoli of the Treasury Department. Srulowitz called, as his witnesses at the hearing, Joseph Bald, who previously had been convicted for his part in the arson scheme, and Jay Hodes, a fire insurance adjuster retained to negotiate the adjustment of insurance claims generated by the scheme. Srulowitz argued that the reasons advanced by the government for the sealing were pretextual in nature and that the Magistrate Rather than evaluating the testimony presented at the hearing to determine the adequacy of the reasons for sealing given by the government, the district court held that "the failure of the government to make a record of its application to the Magistrate mandates a holding that the indictment was not found until it was unsealed on July 12, 1983." United States v. Srulowitz, 649 F.Supp. 959, 964(E.D.N.Y. 1986). Accordingly, the court dismissed the remaining count of the indictment, because "no predicate act in the RICO count took place during the limitations period." Id. We reverse and remand to the district court with instructions to comply with the directions included in our prior remand.

had no basis whatsoever for ordering that the indictment be sealed.

DISCUSSION

The statute of limitations applicable to the prosecution at bar provides as follows:

[N]o person shall be prosecuted, tried, or punished for any offense, not capital, unless the indictment is found or the information is instituted within five years next after such offense shall have been committed.

18 U.S.C. Sec. 3282. For the purpose of tolling the statute of limitations, an indictment is "found" when it is returned by the grand jury and filed. United States v. Villa, 470 F.Supp. 315 (N.D.N.Y.1979); see United States v. Cerilli, 428 F.Supp. 801, 808 (W.D.Pa.), aff'd, 558 F.2d 697 (3d Cir.), cert. denied, 434 U.S. 966, 98 S.Ct. 507, 54 L.Ed.2d 452 (1977); Fed.R.Crim.P. 6(f). Accordingly, when a sealed indictment is not opened until after the expiration of the time allowed by the statute of limitations for the prosecution of an offense, the statute ordinarily is not a bar to prosecution if the indictment was timely filed. United States v. Muse, 633 F.2d 1041 (2d Cir.1980) (en banc), cert. denied, 450 U.S. 984, 101 S.Ct. 1522, 67 L.Ed.2d 820 (1981). However, when the defendant can demonstrate substantial actual prejudice occurring between the date of sealing and the date of unsealing, the expiration of the limitations period before the latter event warrants dismissal of the indictment. Id. at 1042. In such a case the indictment is not considered "foun...