U.S. v. Thompson, 01-3014.
| Decision Date | 16 April 2002 |
| Docket Number | No. 01-3014.,01-3014. |
| Citation | 287 F.3d 1244 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. Douglas G. THOMPSON; Roger D. Thompson, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Richard A. Friedman, Attorney, Appellate Section, Criminal Division, Department of Justice, Washington, DC, (Jackie N. Williams, United States Attorney, District of Kansas; James E. Flory, Acting United States Attorney, District of Kansas; Nancy Landis Caplinger, Assistant United States Attorney, District of Kansas, Topeka, KS, with him on the brief), for Plaintiff-Appellant.
Debra Egli James of Hampton & Royce, L.C., Salina, KS, for Defendant-Appellee Douglas G. Thompson.
Melody Evans, Assistant Federal Public Defender, District of Kansas, Topeka, KS, (David J. Phillips, Federal Public Defender, District of Kansas, Topeka, KS, with her on the brief), for Defendant-Appellee Roger D. Thompson.
Before SEYMOUR, LUCERO, and MURPHY, Circuit Judges.
The United States, plaintiff-appellant, has appealed an order of the United States District Court for the District of Kansas dismissing with prejudice an indictment against Roger D. Thompson and Douglas G. Thompson, defendants-appellees, on statute of limitations grounds. The government asserts that it did not violate the applicable statute of limitations and that the primary issue involves instead a violation of Rule 6(e)(4) of the Federal Rules of Criminal Procedure. This court exercises jurisdiction pursuant to 18 U.S.C. § 3731.
Because this court concludes that an indictment is "found" under 18 U.S.C. § 3282 when the grand jury votes to indict and the foreperson subscribes it as a true bill, the statute of limitations was satisfied. The sealing of the indictment, however, violated Federal Rule of Criminal Procedure 6(e)(4) and must be analyzed for harmless error. Applying harmless error, this court affirms.
The relevant facts are undisputed in this case. The defendants are brothers and co-owners of a business called Plaza Speedway, an operator and lessor of a dirt-track racing facility near Junction City, Kansas. When Plaza Speedway was formed in 1985, the defendants owned fifty percent of the corporation and Bob More, who was not indicted, owned the other fifty percent. In 1993, flooding damaged the Plaza Speedway property. The defendants subsequently applied for and received a $75,000 loan from the Small Business Administration ("SBA"), a federal agency, to pay for the repairs to the property.
In an unrelated matter, the defendants filed a civil action against the United States in 1997. During the defendants' depositions in the civil litigation, government attorneys became suspicious of the defendants' use of the SBA loan. The evidence in the civil litigation suggested that the defendants used the SBA loan proceeds to buy Bob More's share of the business, in contravention of the loan agreement with SBA. The evidence also suggested that the defendants initiated a sham transaction with Bret Young, who was not indicted. Young signed a statement drafted by Douglas Thompson which said his company, Young Construction, would repair the flood damage to the Plaza Speedway property. This statement was used to help obtain the SBA loan. Based on the evidence developed in the civil litigation, prosecutors began a criminal investigation of the defendants.
As a result of the criminal investigation, a federal grand jury returned a nine-count indictment on February 10, 1999. The indictment charged the defendants with conspiracy to defraud an agency of the United States (Count 1), mail fraud (Counts 2-4), and engaging in monetary transactions in property derived from criminal activity (Counts 5-9). The undisputed length of the statute of limitations for all indicted charges is five years.
Upon the return of the indictment and at the request of the government, the district court ordered the indictment sealed without a discussion on the record. The indictment was unsealed eleven months later, on January 18, 2000. On appeal, the government does not contest the district court's conclusion that the last overt act in the conspiracy occurred on April 4, 1994. Thus, the statute of limitations on the conspiracy charge expired on April 4, 1999 unless tolled. The limitations period on the remaining substantive offenses expired on or before April 6, 1999. The defendants do not challenge the district court's determination that the date on which the grand jury returned the indictment, February 10, 1999, preceded the expiration of all statutes of limitations. Thus, the indictment was returned approximately two months before the expiration of the statute of limitations, but was not unsealed until nine months after the statute expired unless tolled.
The defendants brought a motion to dismiss the indictment on several grounds, including a violation of the applicable statute of limitations. The district court conducted a hearing on the motion to dismiss in which several witnesses, including defendant Douglas Thompson, testified. In a written memorandum and order, the district court explained that "[t]he filing of a sealed indictment within the statutory period may serve to toll the statute of limitations even if the indictment is not unsealed until after the period has expired, provided the indictment was sealed for a legitimate prosecutorial purpose." United States v. Thompson, 104 F.Supp.2d 1303, 1306 (D.Kan.2000).
At the hearing, the government offered two justifications for sealing the indictment: (1) to conduct further investigation into the criminal charges and (2) to avoid influencing the ongoing civil suit and the appearance that the government prosecuted the Thompsons in retaliation for filing the civil litigation against the government. The district court concluded that neither of the reasons justified sealing the indictment. On appeal, the government concedes that the indictment was not sealed for a proper purpose.
The district court also concluded that although the defendants need not show actual prejudice in order for the district court to dismiss the indictment, the defendants had demonstrated prejudice as a result of the violation of the statute of limitations. See id. at 1310-11. The district court then supported its conclusion with the following factual findings:
At the hearing, defense counsel described the fraud case as a "communications case" which focuses on communications between the defendants and the SBA, which occurred in early 1994. The parties' understanding of the terms of the SBA loan, evidenced by phone conversations and written documents, is the core of the prosecution's case. At the hearing, Defendant Doug Thompson testified that he transacted all the business and communicated with the SBA on behalf of Plaza Speedway. He kept records of all communications concerning the SBA loan and never gave any copies to his brother Roger Thompson. All records concerning the SBA loan were kept at his office in Abilene, Kansas. In June 1999, Doug moved his office to Chapman, Kansas. This move had been planned for over a year.
In the process of the move, he ordered that the records five years or older be destroyed, including records of the SBA loan. Time record day sheets with notes as to each phone conversation with the SBA, letters, payment records, expenditures and tax information were all destroyed in the move. Doug testified that he did not remember writing two letters produced by the SBA. He also testified that he had phone conversations not listed in the SBA phone log, specifically, an important conversation on February 28. Doug also remembers correspondence related to the January 28th letter, not contained in the SBA files. Prior to June 1999, defendants had a complete SBA file and all their notes and other information available to them to support their defense. As this is a communications case, it is necessary for the defendants to remember conversations and correspondence which occurred over six years earlier. Defendants have demonstrated actual prejudice resulted from the destruction of documentation and memory loss.
This court generally reviews an order dismissing an indictment for abuse of discretion. See United States v. Wood, 6 F.3d 692, 694 (10th Cir.1993). If, however, the district court dismisses the indictment based on its interpretation of governing statutes, that interpretation is a legal determination reviewed de novo. See id.
The applicable statute of limitations for the indicted crimes provides that "[e]xcept as otherwise expressly provided by law, no 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. § 3282.
This court has not previously addressed the issue of when an indictment is "found" under 18 U.S.C. § 3282. The government submits that an indictment is "found" by an act of the grand jury, and not when the indictment is publicly filed or made known to the defendant. Here, the government argues that sealing of the Thompsons' indictment violated Rule 6(e)(4) of the Federal Rules of Criminal Procedure1 rather than the applicable statute of limitations. The government argues that this distinction is important because a violation of the statute of limitations normally does not require a showing of prejudice before dismissing the indictment, while a violation of the Federal Rules of Criminal Procedure requires a defendant to demonstrate prejudice under harmless error analysis.
The defendants argue that the government violated the statute of limitations. Because the government concedes it did not seal the indictment for a legitimate prosecutorial purpose, defendants submit that the statute of limitations was not tolled...
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