Hidden 'Time' Bombs in White-Collar Criminal Matters

Unfortunately, what was once perceived as a straightforward limitation on the government's significant enforcement powers has become obscured by statutes and court interpretations that tend to elongate the period for the government to act in ways that often are not transparent to even experienced criminal practitioners. A recent wire fraud prosecution in the U.S. District Court for the Northern District of California is a prime example of how the government may lie in wait before launching hidden “time” bombs to lengthen the applicable limitations period. The case raises important issues regarding the government's good faith in its use of the tools Congress has provided to extend applicable deadlines.

Most federal crimes, including traditional white-collar offenses like securities fraud, mail fraud, and wire fraud, are subject to a five-year statute of limitations. See, 18 U.S.C. §3282(a). But Congress has extended the generally applicable five-year limitations periods on numerous occasions, usually in response to a perceived spate of a specific type of crime, or inherent difficulties with investigating certain offenses, particularly those involving overseas conduct. For example, in response to the savings and loan crisis of the 1980s and a growing backlog of bank fraud investigations, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), which extended the statute of limitations for frauds “affect[ing] a financial institution” to 10 years. 18 U.S.C. §3293(2). Similarly, in response to the 2008 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which extended the statute of limitations for certain criminal securities fraud offenses from five to six years. 18 U.S.C. §3301.