Wednesday, July 11, 2012

Sealed Indictments - A Primer (7/11/12; revised 7/12/12)

I am in the process of updating my Federal Tax Crimes book.  I just added a discussion on sealed indictments and thought the readers of this blog might be interested in the subject (the following is a cut and paste from the draft of the revision):

The indictment is a public document.  FRCrP Rule 6(e)(4) permits the Magistrate Judge to seal an indictment “until the defendant is in custody or has been released pending trial.”  The following is from a Federal Judicial Center publication:
An indictment is sometimes filed under seal and kept sealed until the defendant appears. The indictment is kept sealed so as to not tip off the defendant. In some districts, indictments are initially sealed as a matter of course. Once the defendant has appeared, the indictment can be unsealed. If the defendant cooperates with the government’s prosecution of others, who may be defendants in the same case or defendants in cases with other case numbers, then the case may remain sealed because of cooperation. Sometimes an indictment remains sealed after the defendant appears because no one thought to unseal it. 
In a multi-defendant case, it is possible to seal the prosecution against one defendant while the prosecution against another defendant is not sealed. For this project, only cases sealed as to all defendants were counted as sealed cases. In a few of these, the court kept the case sealed until all defendants appeared, which presumably would require either the explicit or implicit consent of those defendants who did appear. 
Sometimes the government asks the court to dismiss a sealed indictment against a defendant who has not yet appeared. Perhaps the government has decided not to prosecute the defendant after all, or the government has decided to prosecute the defendant with a different indictment or in a different jurisdiction. In a few cases, the sealed indictment was transferred. It is not clear whether such indictments should remain sealed permanently. n1640
n 1640 Sealed Cases in Federal Courts, pp. 17-18 (Federal Judicial Center October 23, 2009), here.
Sealed indictments are troubling.  Sealed indictments are not consistent with the fundamental concept that justice and the proceedings in the justice process are and should be open.  Sealed indictments impair the fundamental imperative of a statute of limitations for a crime, a concept that most would consider includes both the actual indictment and notice to the defendant.  Furthermore, depending upon the length of delay before being unsealed, sealed indictments impair the right to speedy trial, a right that is both statutory and based on fundamental notions of due process, and a defendant’s ability to defend charges that could be stale.  The general parameters for sealed indictment law and practices are (this may be more of a best practices list):

1. In requesting the sealed indictment, the prosecutors should state the reason for sealing so that the judge considering the request, usually a Magistrate Judge, can consider the need for sealing.  (Practice in some districts may be a bit lax on this, however.)

2. The judge should order indictments sealed only where exigent circumstances demand secrecy and only for so long as those exigent circumstances continue to exist.

3. Sealed indictments, if brought within the applicable statute of limitations, are timely. However, if unsealed after the statute of limitations has expired or even after a substantial period of time has expired, the prosecutors should be required to explain the exigencies that required sealing during the period of sealing.  The indictment should be dismissed if the defendant can show prejudice not justified by the need for sealing the indictment.

As noted above, the most common articulated reason for sealing is the need to avoid tipping off one or more of the defendants who might otherwise become a fugitive.  If indeed the defendant is a fugitive, of course, the statute of limitations is tolled, so the filing under seal is not needed to obtain a statute of limitations benefit.

The potential for sealed indictments is a looming presence in one of the broadest criminal initiatives the Government has undertaken recently – U.S. taxpayers’ use of offshore financial accounts to hide taxable income.  Many of the U.S. taxpayers and their enablers (such as Swiss bankers) reside abroad or are frequently abroad.  Some of the U.S. taxpayers have feared that, if they did not join the offshore voluntary compliance programs (in seriatim iterations), the Government might obtain enough information to indict, obtain a sealed indictment and pick them up when they go through customs upon re-entering the U.S.  The enablers cannot join the offshore voluntary compliance program.  Their solution is to avoid coming to the U.S. or, otherwise, doing some type of traditional voluntary disclosure where they can serve up enough skullduggery by other persons (e.g., bank clients or other enablers) that the IRS / DOJ may give them a pass.  (This did not work for Mr. Birkenfeld, for reasons that remain cloudy, but properly orchestrated, I think it would work.)

For postings on Birkenfeld, see here.

A sealed complaint -- an indictment temporary substitute -- was used to pick up Michael Little, an alleged enabler, on his entry into the U.S.  See my blog entry, British Lawyer Charged in Swiss Bank Mess Related to UBS Account (5/11/12), here.

For more on the sealed indictment, see John Stinson, Secret Indictments: How to Discourage Them, How to Make them Fair, 2 Drexel Law Review 104 (2009), here.

2 comments:

  1. Are there any statute of limitations for a sealed indictment ? How many years can it remain sealed ?

    ReplyDelete
  2. I presume your question is that, once sealed, is there any statute or rule like a statute of limitations that would require unsealing in a stated period of time or dismissal of the indictment. There are no such statutes or rules.

    The practical imperative to not seal indefinitely is, of course, to arrest and try the defendant. And, the defendant can move to dismiss the indictment if the delay caused unfair prejudice.

    Finally, keep in mind that the statute of limitations itself is tolled (i.e., suspends the running of the statute of limitations) in the following cases:

    1. For all Title 18 crimes, while the defendant is a fugitive. 18 USC 3290. Fugitive is defined as “any person fleeing from justice.” The “majority rule” is that “intent to avoid arrest or prosecution must be proved” for § 3290's fugitive definition to apply; the minority rule is that mere absence from the jurisdiction, regardless of intent, is sufficient.

    2. For tax crimes, while the defendant is absent from the country without regard to any intent or fugitive status. 26 USC 6531.

    Putting these concepts together, for indictment sealed because the defendant is out of the country, at least in tax cases, the statute of limitations is tolled and the prosecution thus does not need a sealed indictment to beat the expiration of the statute of limitations.

    Jack Townsend

    ReplyDelete

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