Defenses To Tolling Applications Under 18 U.S.C. ' 3292

• Published date: 22 December 2022
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Constitutional & Administrative Law, Trials & Appeals & Compensation
• Law Firm: Steptoe & Johnson
• Author: Mr Patrick F. Linehan and Meredith Lewis

Investigations by the Department of Justice and other agencies cover a wide swath of conduct, but often share one thing in common: They don't stop at the border. This investigatory breadth mirrors the transnational operations of modern corporations, and brings with it the need to collect evidence residing outside of the US.

Counterintuitively, extraterritorial evidence collection confers a significant advantage to prosecutors: 18 U.S.C. ' 3292 enables prosecutors to toll the statute of limitations for federal crimes by up to three years while waiting to obtain foreign evidence. While the purpose of the statute is to account for the time needed to collect foreign evidence, there have long been concerns that prosecutors may improperly use ' 3292 to buy themselves more time to bring charges, particularly given the length of time it often takes for foreign governments to respond to these requests.

A DOJ OIG memorandum leaked in February 2020 alleged precisely such abuses, finding that prosecutors have made ' 3292 applications even where the need for foreign evidence was minimal. The courts have also taken note. In July 2022, Judge Kenneth M. Hoyt of the US District Court for the Southern District of Texas in United States v. Leon-Perez reiterated that the government could not use ' 3292 "simply as a tool to extend tolling, or as a discovery stratagem." No. 4:17-CR-00514, 2022 BL 317943, at *9 (S.D. Tex. July 11, 2022).

In practice, this means that companies and individuals who may have exposure to possible criminal conduct must remain vigilant of potential charges long after the statute of limitations would typically have expired, and consider the possibility of a tolling under ' 3292 when assessing any limitations period.

For example, in May 2019, a federal grand jury in D.C. returned an indictment which included charges arising from an alleged scheme to defraud the FEC related to conduct that took place between 2012-2013. See United States v. Michel, No. 19-148-1 (CKK), 2019 BL 427034 (D.D.C. Nov. 06, 2019). In 2018, federal prosecutors submitted two ex parte applications to suspend the statute of limitations under ' 3292, enabling them to bring the charges after the limitations period would have normally expired

This article provides an overview of ' 3292 and discusses potential defenses to the tolling ' 3292 permits.

Section 3292 in a Nutshell

Congress enacted ' 3292 to address the delay associated with collecting evidence from foreign jurisdictions, prompted by the increasing use of offshore banks to launder the proceeds of criminal activities, and federal prosecutors' corresponding need to obtain records from those banks. See Pub. L. No. 98-473, ' 1218(a), 98 Stat. 1976, 2167 (1984); Michel, 2019 BL 427034; United States v. Meador, 138 F.3d 986, 994 (5th Cir. 1998); United States v. Torres, 318 F.3d 1058, 1062 (11th Cir. 2003).

Triggering ' 3292 is straightforward. When evidence relevant to an investigation is located in a foreign country with whom the US has a Mutual Legal Assistance Treaty (MLAT), the government may make an "official request" for that evidence to the relevant authorities in that country. 18 U.S.C. ' 3292(a)(1) (2018). The government must then apply to the district court before which the grand jury investigating the offense has been impaneled, seeking to toll the statute of limitations. See Torres, 318 F.3d at 1062.

In practice, such requests are almost invariably made ex parte, leaving defendants unable to contest the request, and unaware that the limitations period has been tolled. If the application is granted, the statute of limitations is suspended from the date the official request was made until the date the foreign government takes "final action" on the request, for a maximum tolling period of three years. 18 U.S.C.' 3292(b), (c)(1). However, if the foreign government takes final action before the original 5-year limitation period expires, the statute of limitations is only tolled for six months. 18 U.S.C.' 3292(c)(2).

Defenses

Defendants retain a variety of defenses to tolling applications under ' 3292, including challenges to the initial application, the "final action" by the foreign government, and due process considerations. These defenses to each stage of the ' 3292 process are considered in turn.

The Ex Parte Application

The government's initial ex parte application offers the first avenue of defense. The due process clause of the Fifth and Fourteenth Amendments prohibits the deprivation of "life, liberty, or property, without the due process of law." U.S. CONST., amends. V, XIV ' 1.

Where the government's tolling request was submitted to the court ex parte, defendants may argue that the application violates due process. The majority of courts to address this issue (although not yet the Supreme Court) have permitted the use of ex parte applications. United States v. Lyttle, 667 F.3d 220, 225 (2d Cir. 2012); United States v. Hoffecker, 530 F.3d 137, 168 (3d Cir. 2008); United Torres, 318 F.3d at 1061; United States v. Wilson, 249 F.3d 366, 371 (5th Cir. 2001); DeGeorge v. U.S. Dist. Court for Cent. Dist. Cal., 219 F.3d 930, 937 (9th Cir. 2000).

For instance, the US Court of Appeals for the Ninth Circuit observed that nothing in the text of ' 3292 entitles the party being investigated to notice or a hearing before the suspension of the statute of limitations and that ex parte applications align...