Beware Ex Parte Order Suspending Statute of Limitations - U.S. Second Circuit
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Beware Ex Parte Order Suspending Statute of Limitations

Never send to know for whom the statute of limitations tolls; it tolls for thee the government. Unless a court files an ex parte order suspending the running of the statute of limitations so the government can gather evidence from a foreign country.

And according to a Second Circuit Court of Appeals opinion this week, such ex parte orders are okay.

Violette Eldridge was convicted on charges relating to her involvement in a fraudulent "high-yield investment program." Before she was indicted, and before the applicable statute of limitations had run, a district court granted the government's application to suspend the statute of limitations in her case while the government worked with the Hungarian government in recovering records relating to transfers of the proceeds of Eldridge's scheme into Hungarian bank accounts.

(Sidebar: Eldridge's indictment obviously occurred after the statute of limitations had run, or we wouldn't be talking about her and shamelessly paraphrasing John Donne.)

Armed with the necessary evidence, Eldridge was indicted and convicted. On appeal, she asserted three reasons why the indictment should have been dismissed:

  1. There was insufficient evidence to support the district court's order to suspend the running of the statute of limitations.
  2. The government already had sufficient evidence to present an indictment to the grand jury before the statute of limitations ran, and copies of the foreign bank's records could have been obtained pursuant to a subpoena duces tecum.
  3. The district court's use of an ex parte proceeding when issuing the suspension order was improper, and Eldridge was entitled to notice and a hearing before the tolling order issued.

The Second Circuit Court of Appeals rejected each of Eldridge's claims.

First, the appellate court ruled that the requirement for tolling suspension is satisfied so long as the government presents "something with evidentiary value ... tending to prove it is reasonably likely that evidence of the charged offenses is in a foreign country."

In Eldridge's case, the government presented a copy of the government's official request to Hungary, a transcript of a victim's grand jury testimony explaining how he had been defrauded, and an FBI agent's sworn affidavit tracing transfers of victims' funds from a U.S. bank account to a Hungarian bank account. The Second Circuit found that to be more than enough evidence to support suspension.

Second, the court noted that the suspension of limitations statute does not require that the foreign evidence sought be necessary for an indictment

Finally, the Second Circuit noted that neither statute nor case law offer the party whose statute of limitation is being suspended notice or a hearing.

A federal judge's ex parte order suspending tolling in a case against your client can blow your whole statute of limitations defense. If you're representing a client who, like Eldridge, is getting the short end of the statute of limitations stick, either attack the evidence supporting the suspension or prepare for a plea bargain.

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