United States v. Gentile

• Decision Date: 30 January 2017
• Docket Number: Civil Action No.: 16–cr–155 (JLL)
• Citation: 235 F.Supp.3d 649
• Parties: UNITED STATES of America, v. Guy GENTILE, Defendant.
• Court: U.S. District Court — District of New Jersey

235 F.Supp.3d 649

UNITED STATES of America,

v.Guy GENTILE, Defendant.

Civil Action No.: 16–cr–155 (JLL)

United States District Court, D. New Jersey.

Signed January 30, 2017

Nicholas Paul Grippo, Office of the U.S. Attorney, District of New Jersey, Newark, NJ, for Plaintiff.

Joseph Tacopina, New York, NY, for Defendant.

OPINION

LINARES, District Judge.

This matter comes before the Court by way of Defendant Guy Gentile's Motion to Dismiss the Indictment (ECF No. 14("Def Mov. Br.")). The Government has submitted opposition (ECF No. 19 ("Gov. Opp. Br.")), which Defendant has replied to. (ECF No. 23 ("Def. Rep. Br.")). The Court decides this matter after hearing oral argument on December 21, 2016. (ECF Nos. 29, 31). For the reasons set forth below, the Court grants Defendant's Motion to Dismiss.

I. BACKGROUND

Defendant was indicted for securities fraud violations in connection with "pump-and-dump scheme[s]," that allegedly occurred beginning in April of 2007 and ended approximately in June 2008. (ECF No. 1 ("Indictment")). At the time that Defendant's alleged criminal conduct ended in June 2008, the applicable statute of limitations was five years, pursuant to 18 U.S.C. § 3282(a). On June 25, 2012, Defendant was charged in connection with said schemes by way of sealed complaint. (Gov. Opp. Br. at 5). There is no dispute that, as previously stated, Defendant's alleged criminal activity had ended as of June 2008. See December 21, 2016 Transcript ("Trans.") at 41:21–42:11. He was arrested based on the sealed complaint on July 13, 2012. (Gov. Opp. Br. at 5). The Government asserts that subsequent to the arrest and while in custody over the weekend, Defendant admitted his involvement in the pump-and-dump schemes, identified other similar schemes, and agreed to cooperate with the Government. (Id. ). He was released three days later. (Id. ). At that time, on August 1, 2012 Defendant signed a waiver tolling "any statute of limitations" relating to the charges for the period of July 31, 2012 through July 31, 2013 ("First Tolling Waiver"). (Gov. Opp. Br. at 6; see also Exhibit G to Ford Cert.). One year later, on July 31, 2013 Defendant signed a second waiver tolling the statute of limitations for the period of July 31, 2013 through July 31, 2014 ("Second Tolling Waiver"). (Id. ; Id. at Exhibit H). This was the last waiver signed by Defendant who refused to sign a third tolling waiver, allegedly because he wanted everything to be over by June 30, 2015. (See Defendant Cert. ¶¶ 19 ("because I was concerned the government would try to force me to cooperate indefinitely, I told the government that I was refusing to sign another tolling affidavit because I wanted to be certain that everything was over on June 30, 2016"), 22 ("The government continued using me as a cooperator all through the summer of 2015, over a year after I refused to sign an additional tolling agreement upon the explicit statement that I was not signing so I could be sure everything was fully resolved a year later."); Ford Cert. ¶ 18 ("During the August 2014 meeting, I told everyone present that Mr. Gentile was refusing to sign another tolling agreement because, in sum and substance, he wanted to make sure that everything was over by June 30, 2015"); Trans. at 67:17–21 ("Mr. Ford states that he told everyone present at a meeting with the Government on (sic ) August 2014, that Mr. Gentile was refusing to sign another tolling agreement because in sum and substance, he wanted to make sure that everything was over by June 30th, 2015.")).

In June of 2015, the Government notified Defendant's attorney that it would not agree to a non-felony disposition, as Defendant desired, and was prepared to proceed with a felony disposition based on a binding plea agreement. (Id.). The plea agreement that was presented to Defendant, if followed by the Court, would have resulted in a sentence of probation. (Id.). Defendant rejected the plea off and was subsequent indicted on March 23, 2016. (Indictment at 1).

Defendant now moves to dismiss the aforementioned indictment asserting it is untimely for two reasons. (See generally Def. Mov. Br.). First, Defendant argues that the enactment of "Dodd–Frank Wall Street Reform and Consumer Protection Act" ("Dodd–Frank") on July 21, 2010, and the six-year statute of limitations for securities fraud violations contained therein, is inapplicable to Defendant since his criminal acts took place prior to said statute's enactment. (Def. Mov. Br. at 20–23), and argues that the five-year statute of limitations that was in effect at the time of the completion of the alleged crimes is the statute of limitations applicable to him. (Id.). Thus, Defendant avers that the latest possible date he could have been charged, even if both statute of limitation waivers are valid, would have been June 30, 2015. (Id.). Therefore, it is Defendant's position that the indictment filed March of 2016 is untimely. (Id.).

Defendant also argues that even assuming that the six-year statute of limitations is in fact applicable, the statute of limitation waivers signed by Defendant are nevertheless invalid because they were made unknowingly. (Def. Rep. Br. at 27–30). Defendant asserts that at all times, and specifically at the times the waivers were signed by him, both he and the Government were clearly operating under the assumption that the statute of limitations was in fact five years. (Id.). The Government has conceded this point. (See Trans. at 33:3–4). Thus, Defendant's position is that even assuming the statute of limitations applicable to his case is actually six years, he entered into both tolling waivers under the expressed assumption that the statute of limitations applicable at the time was indeed five years and he therefore signed the aforesaid waivers without knowledge or a clear understanding as to the rights he was in fact waiving. (Def. Rep. Br. at 27–30). Defendant claims that therfore these waivers were made unknowingly are are invalid. If the waivers are in fact found to be invalid by this Court, the indictment, according to Defendant, needed to be filed by June 30, 2014 under the six-year statute of limitations. (Id.). Thus, Defendant concludes the March 2016 indictment is untimely.

The Court addresses both of these arguments separately below.

II. DISCUSSION

A. Validity of the Statute of Limitation Tolling Waivers

In determining the statute of limitations applicable herein, and in deciding the validity of the waivers at issue, this Court is cognizant that criminal statutes of limitations are to be interpreted in favor of repose. Toussie v. United States , 397 U.S. 112, 115, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970) (quotations and citation omitted); see also United S tates v. Atiyeh , 402 F.3d 354, 365 (3d Cir. 2005). The Court is also aware that a defendant entering into a waiver of the statute of limitations is abandoning an important statutory right. See U.S. v. Levine , 658 F.2d 113, 115 (3d Cir. 1981) (citing U.S. v. Wild , 551 F.2d 418 (D.C. Cir.), cert. denied , 413 U.S. 916, 97 S.Ct. 2178, 53 L.Ed.2d 226 (1977)(which held that the statute of limitations was a waivable right)). "Much like plea bargaining, a waiver of the statute of limitations is a pretrial agreement between the state and the defendant." U.S. v. Levine , 658 F.2d 113, 124 (3d Cir. 1981). Since they are similar, waivers involve a relinquishment of important rights and "should also be made with the advice of counsel and informed by an understanding of the consequences of the waiver ." Levine , 658 F.2d at 124 (emphasis added); see also Houmis v. U.S. , 558 F.2d 182, 183 (3d Cir. 1977) (holding that where "substantial confusion" calls into question whether there was a "meeting of the minds" over a plea agreement, there is no agreement to be enforced); McKeever v. Warden SCI–Graterford , 486 F.3d 81, 95 (3d Cir.), cert. denied , 552 U.S. 1019, 128 S.Ct. 538, 169 L.Ed.2d 389 (2007) (stating that a plea agreement "is voidable in its entirety" when the Defendant entered into such agreement without the knowledge and understanding of the rights being waived).

It is in the context of the aforesaid law that this Court conducts its analysis. Here, the statute of limitations for securities fraud was, without dispute from either side, five years at the time Defendant allegedly committed the subject violations. See 18 U.S.C. § 3282(a). In fact, the Government claims that Defendant's last criminal act occurred in June of 2008. Thus, the five-year criminal statute of limitations applicable at that time expired as of June of 2013. Defendant was arrested in July of 2012, which meant that if he were going to cooperate with the Government he only had 11 months to do so before the statute of limitations expired. However, Defendant nevertheless executed two tolling waivers which, to his detriment, extended the statute of limitations he and the Government though applied to him at that time in order to allow himself more time to cooperate with the Government with the apparent hope that the Government would take his cooperation under consideration. Thus, the limitations period, as extended by the waivers Defendant signed under the five-year statute of limitation, which was the statute that both the Government and Defendant thought they were operating under, along with the tolling waivers, gave the Government until June 30, 2015 to timely indict Defendant.

Both parties admittedly were operating under the assumption that the statute of limitations was five years. See Trans. at 9:16–22. In fact, the Second Tolling Waiver even included the date of June 30, 2015 as the latest possible date the Government could institute a criminal action against Defendant. See Trans. at 35:3–14. "[T]he Government [also admits] it was operating under the understanding that the statute of limitations was five years." See Trans. at 33:3–4.

Presently, the Government argues that, notwithstanding the parties' assumption that the statute was five years...