Fifth Circuit Holds Criminal Statute of Limitations is Not Suspended for Equitable Tolling on Government's Alleged Excuses (8/20/24)

In United States v. Plezia, 115 F.4th 379 (5th Cir. 2024), CA5 here and GS here, the Court states the facts relevant to this blog as follows (Slip Op. 1-4, bold face supplied by JAT):

          Richard Plezia (“Plezia”) challenges his convictions of conspiracy to defraud the United States, making false statements, and falsification of records in a federal investigation following a fifteen-day jury trial. He challenges the sufficiency of the evidence for some of the convictions, the district court’s determination that the statute of limitations for one count of making false statements was equitably tolled, and the district court’s decision to allow two witnesses to testify with the aid of prior recorded recollections.

          Because we agree with Plezia that equitable tolling of the statute of limitations in 18 U.S.C. § 3282 is not available, we VACATE Plezia’s conviction under [*2] Count Five and remand with instructions to dismiss Count Five with prejudice. However, the panel’s agreement with Plezia ends there. With respect to every other assignment of error, we AFFIRM.

I. Factual Background

          Plezia was a Houston-based personal injury attorney charged with conspiracy to defraud the United States through falsified reporting on tax returns to the Internal Revenue Service (“IRS”). The alleged falsified gains arise from barratry, the impermissible practice of attorneys soliciting clients that have not invited any contact with prospective counsel. The Government averred that Plezia conspired with a group of personal-injury attorneys and non-attorney case runners (“case runners”) in Houston, Texas to unlawfully reduce the federal income taxes owed by Jeffrey Stern (“Stern”). The case runners were alleged to solicit clients for Stern—in violation of the Texas Penal Code and the Texas Disciplinary Rules of Professional Conduct (“TDRPC”). The charging instrument set out that Plezia worked with case runner Marcus Esquivel (“Esquivel”) to aid Stern in reducing the income taxes he owed from 2011 through 2013. It alleged that Stern “funneled” illegal payments for soliciting and “running” cases to Esquivel by writing checks to Plezia—who subsequently wrote corresponding checks out to Esquivel’s business entities. Stern would then deduct the amounts paid to Plezia as attorney “referral fees.”

A. The Indictments and Pretrial Proceedings

          In August 2019, Stern was arrested and charged with conspiracy to commit fraud against the United States, willfully filing a false tax return, and obstruction of justice. Stern pleaded guilty to the first two counts and agreed to pay over $4.35 million in restitution to the IRS and cooperate with the prosecution and investigation of other attorneys involved in the scheme. On August 6, 2019, the grand jury indicted Plezia on one count of conspiracy to [*3] defraud the United States in violation of 18 U.S.C. § 371 (“Count One”). On January 18, 2022, the grand jury returned a Third Superseding Indictment adding two counts of making false statements to IRS agents in violation of 18 U.S.C. § 1001(a)(2) (“Counts Five and Six”) and one count of falsifying records in violation of 18 U.S.C. § 1519 (“Count Seven”).

          Count One’s allegations against Plezia are limited to his participation in redirecting checks to Esquivel. Count Five sets out that Plezia falsely told an IRS agent in Houston in December 2016 that he had never paid Esquivel any referral fees for clients in violation of the Texas bar rules. Count Six avers that Plezia made another materially false statement to IRS agents in September 2018 when he averred that any payments between him, Esquivel, and Stern were provided solely for the purpose of financing his ongoing benzene exposure toxic tort litigation against BP. Lastly, in Count Seven, the Government alleged that Plezia created a false document supporting or tracking the false statement he made in Count Six with the intent to impede a federal investigation under the jurisdiction of the IRS.

          Plezia pleaded not guilty to all charges and proceeded to a jury trial on January 9, 2023. He moved to dismiss the entirety of the Third Superseding Indictment for constitutional violations. Plezia argued that the Government’s delay in prosecuting all charges violated his Fifth and Sixth Amendment rights. He also filed a separate motion to dismiss Count Five as barred by the five-year statute of limitations in 18 U.S.C. § 3282 because it was filed over five years after the alleged false statement was made. He asserted that Count Five was filed five years and forty-two days after the alleged false statement was made even though the Government had all relevant information to charge him with that offense for at least three years before the Third Superseding Indictment. The Government opposed both motions and argued that the statute of limitations had been tolled due to the delays arising from its compliance with the district court’s COVID orders [*4] and from delays in processing Justice Department approvals during the pandemic. It further argued that the discovery of evidence of Plezia’s involvement in Stern’s scheme was hindered by COVID delays related to several steps of the investigation which prompted the addition of Count Five. 

For purposes of this blog entry, I focus on the statute of limitations issue related to the Government’s claim, accepted by the district court, of equitable tolling of the relevant 5-year statute of limitations in 18 U.S.C. § 3282. Count Five charged violation of 18 U.S.C. § 1001(a)(2), making false statements to IRS agents. The original indictment without this Count was timely filed, but a superseding indictment added Count Five “five years and forty-two days after the alleged false statement was made.”  The Government proffered as a reason (excuse) for the delay that, although the facts were known to the prosecutors within the applicable 5-year limitations period, the required DOJ Tax approval had not been obtained as a result of delays arising from the pandemic. The district court agreed and held Count Five to be timely. The Court of Appeals disagreed, holding that there was no equitable tolling of the statute of limitations. (Slip Op. 14-16.) The Court’s holding is straight-forward: the statute is 5-years; the statutory tolling provisions (such as the WSLA discussed below in ¶ 4 were not applicable; there is no equitable tolling based on the excuses the Government proffered. Hence, the conviction on Count Five is reversed with instructions on remand to dismiss.

JAT Comments:

1. On remand, resentencing would not be appropriate because the sentencing court could consider the Count 5 conduct (as opposed to the conviction) as relevant conduct. See Fifth Circuit Reversal of Count of Conviction Based on Statute of Limitations May Permit the Reversed Count Conduct as Relevant Conduct for Affirmed Count (Federal Tax Crimes Blog 7/28/24), here; and Sentencing Guidelines Amendment Eliminates Acquitted Conduct from Sentencing Calculations (Federal Tax Crimes Blog 6/6/24; 6/11/24), here,

2. Even if the dismissed Count Five were not considered in sentencing, the remaining affirmed Counts of conviction more than sufficient to support the relatively light sentence of “six months and one day in prison.” (It seems to me that on the conduct proved at trial this was a very light sentence not likely to be reduced.)

3. I am not sure of the purpose of the “six months and one day” sentence (as opposed to, say, just six-months). Compare a sentence of one year and one day which does achieve a benefit for the defendant. Illustration of Why a 366 Day Sentence is better than 365 Days (Federal Tax Crimes Blog 2/20/15), here. If anyone knows why the sentencing court made the sentence "six months and one day," please let me know.

4. In discussing the statutory tolling for statutes of limitations the Court mentions 18 U.S.C. § 3287, the Wartime Suspension of Limitations Act (titled “Wartime suspension of limitations” but often initialized to “WSLA”). That act applies only to crimes involving “fraud or attempted fraud.” Fraud is not an element of the crime charged in Count Five, false statements, 18 U.S.C. § 1001(a)(2).