Monday, December 9th, 2013

Conspiracy Charges Barred by Statute of Limitations

United States v. Grimm, et al., Nos. 12-4310-cr; 12-4365-cr; 12-4371-cr (2d Cir. Dec. 9, 2013) (Kearse, Jacobs, and Straub), available here

As we previously reported (at this link), on November 26, 2013, the Court issued a one-page order reversing the conspiracy convictions of Peter Grimm, Dominick Carollo, and Steven Goldberg. The order stated that an opinion would follow in due course. This is the promised opinion, in which the Court ruled, by a two-to-one vote, that the indictment was barred by the applicable statutes of limitations.
The three defendants, employees of General Electric Company (“GE”), conspired to fix below-market rates on interest paid by GE to municipalities. The conspiracy depressed the interest rate on the payments made to the municipalities by GE, an unindicted co-conspirator.
The appeal turned on whether the artificially reduced payments by GE to the municipalities constituted “overt acts” in furtherance of the conspiracy. If not, the prosecution was barred by the statutes of limitations. If the payments did constitute cognizable “overt acts,” then the prosecution was timely.
Judge Jacobs’s majority opinion held that the payments did not constitute overt acts in furtherance of the conspiracy. Relying on United States v. Salmonese, 352 F.3d 608 (2d Cir. 2003), and United States v. Doherty, 867 F.2d 47 (1st Cir. 1989), the Court declared that a conspiracy ends (notwithstanding the continued receipt of anticipated profits) when (1) the payoff “merely consists of a lengthy, indefinite series of ordinary, typically noncriminal, unilateral actions,” and (2) no evidence shows “that any concerted activity posing the special societal dangers of conspiracy is still taking place.”
These two criteria were present here. First, the payments by GE were lengthy, indefinite, ordinary, noncriminal, and unilateral. Second, the payments were the result of a completed conspiracy, rather than acts in furtherance of an ongoing conspiracy. The payments did not raise the underlying concern of concerted action, and therefore were not continuous actions that prolonged the life of the charged conspiracy. 
Judge Kearse dissented. She concluded that the charged conspiracy was specifically designed to enable some of the conspirators to win investment contracts that provided them with economic gains over the life of the contracts by allowing them to make periodic interest payments at artificially low rates. In this situation, the dissent declared, the conspiracy continued until the contracting co-conspirator’s final payment pursuant to the contract. Accordingly, the dissent opined, the GE payments were properly viewed as overt acts, and the prosecution was not time-barred.    
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