United States v. Pursley, 011222 FED5, 20-20454

Docket Nº20-20454
Opinion JudgeKurt D. Engelhardt, Circuit Judge.
Party NameUnited States of America, Plaintiff-Appellee, v. Jack Stephen Pursley, Defendant-Appellant.
Judge PanelBefore Davis, Higginson, and Engelhardt, Circuit Judges.
Case DateJanuary 12, 2022
CourtUnited States Courts of Appeals, United States Court of Appeals (5th Circuit)

United States of America, Plaintiff-Appellee,

v.

Jack Stephen Pursley, Defendant-Appellant.

No. 20-20454

United States Court of Appeals, Fifth Circuit

January 12, 2022

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:18-CR-00575-1

Before Davis, Higginson, and Engelhardt, Circuit Judges.

Kurt D. Engelhardt, Circuit Judge.

This criminal case concerns an intricate tax-fraud scheme, involving various offshore accounts, a myriad of transactions, and millions in untaxed funds. The focus of this appeal concerns a complex question of fact and law, involving various foreign governments, a host of ambiguous letters, and a thicket of precedent. Jack Pursley raised this complex question as part of his statute of limitations defense several times in motions to dismiss and in proposed jury charges. The law and facts are difficult, but we conclude that Pursley was deprived of his statute of limitations defense. Because Pursley

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timely raised this defense, he was entitled to have it considered and to have the jury instructed on it.

I.

At some point in the past decade, a grand jury began investigating Pursley for his part in a significant tax fraud scheme. The extensive details of the conspiracy are laid out in the indictment and are mostly irrelevant to the precise issue before us. Relevant here is that the scheme involved the use of several offshore accounts, including certain accounts in the Isle of Man. On February 18, 2016, the U.S. Government sent a first "Request for Assistance in the Investigation of Jack Stephen Pursley and Charles Gillis" to the Isle of Man (the "First Request"). According to a representation from the U.S. Government, the First Request sought "business records from Isle of Man Financial Trust Limited, bank records from the Royal Bank of Scotland, Isle of Man branch, and official incorporation records for Southeastern Shipping Company Limited and Pelhambridge Limited." The First Request also sought "the assistance of the Isle of Man to interview six witnesses who are current or former employees of the [Isle of Man Financial Trust Limited]: Andrew Thomas, Nigel Tebay, Andrew Mellor, Kerry Smith, and Christine James and Tracy Duncan."

On March 15, 2016, the U.S. Government sent the Isle of Man a "First Supplemental Request for Assistance in the Investigation of Jack Stephen Pursley and Charles Gillis" (the "Second Request"). According to the U.S. Government, the Second Request sought "business records from Boston Limited relating to the firm's representation of Southeastern Shipping Company Limited, Pelhambridge Limited, and Shaun Mooney and any of his affiliates." Neither Request was made part of the record, which reflects only the U.S. Government's representations on what was in the Requests.

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The Isle of Man cooperated with the Government and began sending over the requested documentation as early as May 26, 2016. An August 21, 2017 letter states that the Isle of Man also sent over documentation on July 8, 2016, September 30, 2016, October 31, 2016, May 24, 2017, June 19, 2017, and July 17, 2017. On May 18, 2017, the Isle of Man sent a response which referenced the "Supplementary Letter of Request" (i.e., the Second Request). At the end of the letter, it stated "I believe that this letter of request is now executed in full but if I can be of any further assistance to you in relation to this or any other matter please do not hesitate to contact me." Although the May 18 letter referenced the Second Request, it discussed documents which were requested in the First Request.

The Government followed up with the Isle of Man with a series of emails stretching from August 2017 through October 2018. These emails demonstrate that the U.S. Government continued to seek certain documents that were not provided as of May 18, 2017, and that it was frustrated in its attempts to get these documents and (in particular) witness interviews.

On August 23, 2016, with both Requests pending, the Government moved for a suspension of the statute of limitations under 18 U.S.C. § 3292, which allows for a suspension of the limitations period when the Government seeks evidence from a foreign country. District Court Judge Sim Lake granted the ex parte application the next day. The district court's order stated that "the running of the statute of limitations for the offenses set forth in the Government's Ex Parte Application is hereby SUSPENDED for the period authorized by 18 U.S.C. § 3292(b), (c)." The order did not specify the length of the extension.

The grand jury returned a four-count indictment against Pursley on September 20, 2018. Count One charged Pursley with conspiracy to defraud the United States. Counts Two and Three charged Pursley with tax evasion

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for his 2009 and 2010 tax returns, respectively. Count Four charged Purlsey with tax evasion in violation of 26 U.S.C. § 7201. The case was assigned to United States District Judge Lynn Hughes.

Pursley moved to dismiss all counts as barred by the statute of limitations. Relying on the suspension ordered by the district court, the Government opposed the motion. The district court denied the motion to dismiss without written reasons in a case management order. Pursley again moved to dismiss the indictment as untimely based on new evidence in May 2019. The district court again denied the motion. At a pretrial hearing, the district court seemed to base the dismissal on the order suspending the limitations period without analysis of how long the suspension lasted. The district court stated, "[A]pparently Judge Lake, in this building, extended limitations, and I can rely on Judge Lake's judgment. So I'm going to have to deny the limitations defense."

Pursley was tried in September 2019. Pursley proposed a jury instruction that read: "For you to find the defendant guilty, the government must prove beyond a reasonable doubt that the offense charged was committed within 6 years of the indictment." Defense counsel raised this jury instruction at the charge conference. The Government objected to the instruction for a variety of reasons, including because it failed to account for tolling under 18 U.S.C. § 3292. The Government "acknowledged that it could be appropriate to instruct the jury that it needed to find an overt or affirmative act within the correctly defined limitations period" but "noted that . . . the request was 'awfully late' and that 'we could have dealt with this earlier.'" The district court denied the limitations instruction requested by Pursley, and the final jury instructions did not include any instruction regarding the statute of limitations. The jury convicted Pursley on all counts.

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Pursley appeals both the denial of the motions to dismiss and the denial of his requested jury instruction.

II.

We first address the district court's denial of the motions to dismiss. "This court reviews de novo the district court's denial of a motion to dismiss an indictment." United States v. Kay, 513 F.3d 432, 440 (5th Cir. 2007). Similarly, "[t]he district court's ultimate decision that the statute of limitations was properly tolled is a legal conclusion reviewed de novo." United States v. Wilson, 322 F.3d 353, 359 (5th Cir. 2003). But factual findings underpinning that ultimate finding are reviewed for clear error. Id.

To determine the merit of Pursley's statute of limitations defense, it is necessary to determine exactly when the statute of limitations commenced and ran. Without a suspension, the statute of limitations for each count of the indictment ran for six years. See 26 U.S.C. § 6531. As to Count One, "this court has held that the overt acts alleged in the indictment and proved at trial mark the duration of the conspiracy." United States v. Loe, 248 F.3d 449, 457 (5th Cir. 2001). For Counts Two through Four, the statute of limitations begins to run at the latest affirmative act to evade tax liability. See United States v. Irby, 703 F.3d 280, 284 (5th Cir. 2012). The parties agree that there was at least some suspension of the statute of limitations, but they dispute how long that suspension lasted.

The length of any suspension is determined by 18 U.S.C. § 3292. That statute provides that, upon application by the Government, a district court shall suspend the running of the statute of limitations for an offense if the court finds that an official request has been made to a foreign government for evidence of the offense and it reasonably appears that such evidence was in the foreign country. ...

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