Is Theft Scheme a Continuing Offense

Circuit Rules That Embezzlement of Government Property Does Not Constitute "Continuing Offense," Generating Split with Fourth Circuit

In a brief decision issued on Tuesday, July 31, in United States v. Green, the Second Circuit (Cabranes, Carney, Goldberg by designation) vacated in part a judgment ordering the defendant to pay restitution for the theft of government property that was stolen outside the applicable statute of limitations.  In doing so, the Court rejected the government's arguments that the defendant had (i) waived her right to appeal in her plea agreement, and (ii) consented in her plea agreement to pay restitution for property stolen outside the applicable limitations period.  Having disposed of these contentions, the Court rejected the government's argument that the underlying theft was a "continuing offense" that would permit the government to obtain restitution for amounts stolen both within and outside of the limitations period.

Background

The facts giving rise to Green's conviction are straightforward.  Green's mother received monthly benefits payments of about $1,150 from the U.S. Department of Veterans Affairs.  The payments were automatically deposited by the VA into a joint bank account that Green held with her mother.  Approximately one month after Green's mother passed away in January 2009, Green notified Veterans Affairs of the death.  The VA, however, continued to make its monthly deposits into the joint bank account through August 2011.  Green regularly wrote herself checks from the account to withdraw sums similar in amount to the VA payments.  In February 2016—approximately four-and-a-half years after the VA made its final deposit—the government filed an Information charging Green with willfully and knowingly embezzling, stealing, and converting money of the United States in violation of 18 U.S.C. § 641.

Green entered into a plea agreement and agreed to plead guilty to stealing $35,774 between January 10, 2009 and August 2, 2011.  In her plea agreement, Green agreed to pay restitution "in an amount determined by the Court to be equal to the sum of payments unlawfully received within the applicable limitations period."  She also reserved her right, however, to contest any restitution order covering payments stolen outside the limitations period.  This restriction and reservation of rights was significant because the statute of conviction, 18 U.S.C. § 641, carries a five year statute of limitations and the government filed charges about four-and-a-half years after the final monthly VA payment was made.  The government, however, argued at sentencing that Green's theft was a "continuing offense" that included the theft of all payments received after her mother passed away.  The district court ultimately agreed and sentenced Green to a year of probation and ordered that she pay $35,744 in restitution, which covered payments stolen both within and beyond the limitations period.

The Court's Decision

On appeal, the Court quickly dispatched with the government's arguments that Green had waived her right to appeal or had otherwise consented to pay restitution for payments stolen outside the limitations period.  As to the waiver issue, the Court noted that Green's plea agreement waived her right to appeal a restitution order that was "consistent with governing law."  The Court held that the appeal was proper because Green was arguing that the restitution order applying to funds stolen outside the limitations period was not consistent with governing law.  The agreement also contained a specific reservation of the right to contest restitution for payments made by the VA and stolen outside of the limitations period.  The Court observed that the "the government's attempt to circumvent this language does not satisfy the most meticulous standards to which we hold the government in plea bargains." Slip Op. at 7 (citation and quotation omitted).  As to the issue of consent, the Court found that Green had agreed to plead guilty to stealing funds outside the limitations period but that it did not necessarily follow that she had therefore consented to pay restitution for that full period, particularly where the plea agreement expressly reserved the right to raise a statute-of-limitations defense.

On the merits, the government argued that the district court's ruling was proper on the theory that violations of 18 U.S.C. § 641 are not complete each time funds are converted and are instead continuing offenses that encompass multiple instances of conversion.  The core of the Court's analysis concerned this issue.  The Court looked to the Supreme Court's 1970 decision in Toussie v. United States, 397 U.S. 112 (1970), which held that a crime was not a continuing offense "unless the explicit language of the substantive criminal statute compels such a conclusion, or the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing one."  Slip Op. at 10.  The government conceded on appeal that the "explicit language" of § 641 did not compel the conclusion that every chargeable violation of the statute was a continuing offense.  The Court therefore looked only at the "nature of the crime" and concluded that the section of the statute prohibiting "embezzle[ment], steal[ing], purloin[ing], or knowing[] conver[sion]" did not describe offenses that were continuing in nature. Id.  As a result, the district court could not order restitution for payments stolen outside the limitations period on a continuing-offense theory.

In coming to this conclusion, the Court recognized that the Fourth Circuit was the only other appellate court to address this question as to § 641 and that the Fourth Circuit's decision was at odds with Green.  The Court rejected the Fourth Circuit's approach after observing that its sister court had looked beyond the language of the statute and considered the actual charged conduct to determine whether § 641 constituted a continuing offense.  The Green panel concluded that this approach was at odds with the Supreme Court's Toussie decision, in which the Supreme Court had determined "the nature of the crime" by looking only to the statutory definition of the offense and not considering the specific facts of the underlying conviction.  As further justification for diverging from the Fourth Circuit's holding, the Court noted that its analysis hewed closely to the Seventh Circuit's interpretation of 18 U.S.C. § 666, which is a statute closely related to § 641.  It also noted that the majority of district courts to consider the issue had also found that § 641 was not a continuing offense.

Discussion

The Green decision raises larger questions about "continuing offenses" and how they should be analyzed.  In Green, the analysis focused solely on the statutory language and adopted a categorical approach, which the Court believed was more consistent with Toussie.  Such an approach undoubtedly fosters uniform application of the law across cases.  However, it may not fully capture those instances where violations of § 641, on their facts, are more accurately viewed as continuing offenses, as was apparently the case in the Fourth Circuit's case.  In those instances, the government's ability to obtain restitution may be limited, particularly where a series of thefts are not uncovered until many years after the fact.  There are possible virtues to both approaches:  one captures the essence of the particular offense at issue, while the other gives rise to a rule that can be applied in future cases in a straightforward fashion.  It is easier to apply a rule that provides that Section 641 is not a continuing offense, as the Court held in Green , regardless of the underlying facts.  In addition, the categorical approach applied here seems similar to how the Supreme Court has approached the question of whether a crime is a crime of violence covered by the Armed Career Criminal Act, so the mode of analysis will be familiar to lower courts.

Although Green does create a Circuit split, it seems unlikely that this issue will be one that makes its way to the Supreme Court for review anytime soon.  Part of what made the issue so significant here is the government's curious delay of more than four years in bringing charges.  The government's delay seems particularly hard to understand given that the defendant notified the VA that her mother had died, giving the VA an opportunity to stop making the payments in the first place, before any possible crime could have been committed.  At any rate, it will be worth monitoring whether the odds of Supreme Court review change over time, which may depend on whether other circuits begin to weigh in on the interpretation of § 641 or the proper analysis for determining whether a crime constitutes a "continuing offense.

-By Jared Buszin and Harry Sandick

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Source: https://www.pbwt.com/second-circuit-blog/circuit-rules-that-embezzlement-of-government-property-does-not-constitute-continuing-offense-generating-split-with-fourth-circuit

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