Friday, January 28, 2011

Suspension of Statute of Limitations Period During Request for Foreign Assistance to Obtain Evidence (1/28/11)

18 USC Section § 3292 provides that, if the Government makes an official request to a foreign government to obtain evidence in that country and thereafter applies to a district court for an order to suspend the statute of limitations, upon appropriate proof that the official request was made and that the requested evidence is in the foreign country, the district court "shall suspend the running of the statute of limitations for the offense." The suspension period is from the date of the request to the foreign country until the foreign court or authority takes final action on the request, with a maximum of 3 years.  The DOJ CTM discussion of this provision is at CTM 7.06 (2008 ed.).

In Jenkins v. United States, ___ F.3d ___ (9th Cir. 2011), the Ninth Circuit applied this suspension statute in a straight-forward manner. One key holding is worth noting, even though it is a straight forward application of the statute.

The suspension is from the date of the official request and not from the date of either the application to the district court or the district court's order granting the application. This means that, even if the statute of limitations had expired after the date of the official request to the foreign country and before the date of either the application to the court or the court's order, the statute of limitations suspension runs from the date of the official request. The effect is that the statute of limitations can effectively be revived by the application so long as the official request was made during the limitations period.

I note also that Jenkins was an illegal income case arising from a "pump and dump" operation. The charges were (as described by the Court):

(i) multiple counts of securities fraud (15 U.S.C. §§ 78ff, 78j(b));
(ii) wire fraud (18 U.S.C. § 1343);
(iii) international concealment money laundering (18 U.S.C. § 1956(a)(2)(B)(i));
(iv) concealment money laundering (18 U.S.C. § 1956(a)(1)(B)(i));
(v) transactional money laundering (18 U.S.C. § 1957(a))
(vi) each appellant of one count of tax evasion (26 U.S.C. § 7201)
(vii) apparently, each defendant was convicted of a Klein defraud conspiracy and an offense conspiracy to commit wire fraud, securities fraud and mail fraud (although it is unclear whether this was a single count all encompassing conspiracy or multiple counts)
The trial was apparently handled by the DOJ Tax CES (an assumption based on the fact that DOJ Tax attorneys handled the appeal), even though tax counts seem to have been minor in the gravamen of the offenses charged. At any rate, the Court of Appeals addressed the sufficiency of the evidence claims cryptically as follows:

D. Tax Evasion

On appeal, Gentry argues for the first time that the there was insufficient 34] evidence to support his conviction for tax evasion under 26 U.S.C. § 7201. Because Gentry did not preserve this issue at the close of trial, we review for plain error. Olano, 507 U.S. at 732.

The existence of a tax deficiency is an element of tax evasion under 26 U.S.C. § 7201. Boulware v. United States, 552 U.S. 421, 424, 128 S. Ct. 1168, 170 L. Ed. 2d 34 (2008). Gentry argues that Agent Kathleen Cornelius (the IRS agent who calculated the gain Gentry realized from UniDyn stock sales) gave little explanation of how she calculated the deficiency and did not consider Gentry's testimony about his basis in the shares, which would have offset any gains realized by the sales. The record does not compel a conclusion that Agent Cornelius' calculation was incorrect.
Too cryptic to do anything other than quote it and note that the issue was not properly preserved at trial.

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