United States District Court, D. Oregon, Portland Division
Moser ACTING CHIEF, FRAUD SECTION United States Department of
Justice Jennifer Ballantyne Emily Scruggs TRIAL ATTORNEYS
Fraud Section, Criminal Division United States Department of
Justice Attorneys for Plaintiff
Ramfjord Andrew Ho STOEL RIVES LLP Wendy J. Olson STOEL RIVES
LLP Attorneys for Defendant HERNANDEZ, District Judge:
OPINION & ORDER
A. Hernandez United States District Judge
Dennis Merkel is charged with two counts of Major Fraud
Against the United States in violation of 18 U.S.C. §
1031. On December 14, 2018, I heard oral argument on three
motions to dismiss and a motion to strike surplusage from the
Indictment. I ruled from the bench on three of those four
motions but took the motion to dismiss based on the statute
of limitations and/or pre-indictment delay, under advisement.
See Dec. 14, 2018 Min. Ord., ECF 52. This Opinion
explains my reasoning for denying that motion.
to Federal Rule of Criminal Procedure 12(b)(1), Defendant
moves to dismiss the Indictment because the charges are
barred by the applicable statute of limitations.
Alternatively, he argues that the Indictment should be
dismissed based on pre-indictment delay that violated his
Fifth Amendment due process rights. Rule 12(b)(1) generally
provides that "[a] party may raise by pretrial motion
any defense, objection, or request that the court can
determine without a trial on the merits." Fed. R. Cr. P.
Factual Background Relevant to the Motion
April 17, 2018, the grand jury returned the Indictment
charging Defendant with two counts of major fraud against the
United States, arising out of the alleged alteration of
tensile test results on two orders of aluminum extrusions
sold by his employer, Company A, to two customers that were
subcontractors to entities that had prime contracts with the
United States. ECF 1, 2. Those test results were transmitted
on May 20, 2002, nearly sixteen years before the Indictment.
Indictment alleges that Defendant was the production manager
for Plant A beginning in or about 1986. It also alleges that
Plant A was acquired by Company A in 2000. On April 2, 2002,
Company A agreed to sell aluminum extrusions to Customer A,
which was a subcontractor to an entity that had a prime
contract with NASA dated October 28, 1998. On April 9, 2002,
Company A agreed to sell aluminum extrusions to Company C,
which was a subcontractor to Customer B, which had a prime
contract with the Missile Defense Agency dated January 1,
Indictment alleges that Defendant was part of a scheme which
existed over a ten-year period ending in about December 2006.
As Defendant notes, this is approximately twelve years before
the Indictment was returned.
Statute of Limitations
major fraud statute has a seven-year statute of limitations.
18 U.S.C. § 1031(f). Defendant acknowledges that the
seven-year period can be extended under certain circumstances
by the Wartime Suspension of Limitations Act, 18 U.S.C.
§ 3287 (WSLA). Defendant argues, however, that the 2002
version of the WSLA, the statute that was in effect when the
charged conduct allegedly took place, does not extend the
period here and further, that the 2008 version does not apply
retroactively. The Government does not appear to dispute that
the statute of limitations begins to run on the date of the
charged executions of the offense which is May 20, 2002. But,
it argues that the 2008 amended version of the WSLA applies
retroactively and thus, the charges are timely.
its 2008 amendment, the WSLA provided that
"[w]hen the United States is at war[,
] the running of any statute of limitations applicable to any
offense (1) involving fraud or attempted fraud against the
United States or any agency thereof in any manner, whether by
conspiracy or not, . . . . shall be suspended until three
years after the termination of hostilities as proclaimed by
the President or by a concurrent resolution of
Congress." 18 U.S.C. § 3287 (1948) (emphasis
added). Before 2008, meaning under the original 1948 version
of the statute, the WSLA applied "only when the United
States was at war." Kellogg Brown & Root Servs.,
Inc. v. United States, ex rel. Carter, 135 S.Ct. 1970,
1974 (2015). Defendant argues that because there has been no
formal declaration of war since the date of the alleged
offenses involved here, May 20, 2002, the applicable version
of the WSLA at that time would not have extended the major
fraud statute's seven-year limitations period. Defendant
contends that although the United States was engaged in
military activity in Afghanistan beginning on October 7,
2001, and in Iraq as of March 30, 2003, Congress did not
declare war in either instance and thus, the WSLA was never
triggered. Because the United States has not been in a
declared state of war since the offense date of May 20, 2002,
Defendant argues that the pre-2008 WSLA cannot be applied to
extend the statutory limitations period.
relies on Kellogg Brown & Root for the
proposition that the pre-2008 WSLA tolled the statute of
limitations only when there was a formal declaration of war
by Congress. The Court did not so hold, however. Instead, it
expressly declined to resolve the issue. 135 S.Ct. at 1978
& n.4 (holding that because the case involved civil
claims, the WSLA did not suspend the applicable statute of
limitations under either the 1948 or 2008 version of the
statute; explaining that "[t]his holding obviates any
need to determine . . . whether the term 'war' in the
1948 Act applies only when Congress has formally declared
war"). As a 2014 district court case observed, there is
conflicting authority regarding whether the pre-2008 version
of the WSLA was triggered by the Congressional Authorizations
for the Use of Military Force (AUMF) in Iraq and Afghanistan
with some courts holding that these conflicts did not
implicate the pre-2008 version of the WSLA because there was
no formal Congressional declaration of war and others
reaching the opposite conclusion. United States v.
Arnold, 991 F.Supp.2d 1307, 1314 (S.D. Ga. 2014)
(discussing cases). Nonetheless, the Government here does not
rely on the 2002 version of the statute and given the
conflicting law on the "formal declaration of law"
issue, I decline to further address the issue.
Government contends that the charges are timely under the
2008 amended WSLA. In 2008, the WSLA was amended to apply not
only when the United States was at war but also
"whenever Congress has enacted 'a specific
authorization for the use of the Armed Forces, as described
in section 5(b) of the War Powers Resolution (50 U.S.C.
§ 1544(b)).'" Kellogg Brown &
Root, 135 S.Ct. at 1974 (quoting 18 U.S.C. § 3287
after 2008 amendment). The Government cites to two specific
Congressional AUMFs in which Congress cited section 5(b) of
the War Powers Resolution: one for the War on Terror, Pub. L.
No. 107-40, 115 Stat. 224 (2001), and one for the operations
in Iraq, Pub. L. No. 107-243, 116 Stat. 1498 (2002). Thus,
both of these "conflicts" trigger the post-2008
WSLA's tolling of the statute of limitations.
Additionally, the 2008 WSLA amendments extended the
WSLA's tolling period from three years to five years.
Kellogg Brown & Root, 135 S.Ct. at 1976.
cases have applied the 2008 amended WSLA retroactively as
long as the original statute of limitations had not expired
at the time the amendments were adopted in October 2008. In
Arnold, a case involving criminal charges to which
the WSLA could apply to toll the statute of limitations, the
court made several determinations relevant here. 991
F.Supp.2d at 1314-17. First, the court agreed that the AUMFs
directed at the use of force in Iraq and Afghanistan in 2001
and 2002 triggered WSLA suspension under the 2008 version of
the statute. Id. In contrast to the pre-amendment
version on which there was a split of authority as to whether
a formal Congressional declaration of war was required, the
post-2008 version "clearly contemplates these
authorizations as triggering suspension." Id.
the Arnold court agreed with the majority of courts
that the 2008 amended version of the WSLA applied to
pre-amendment conduct as long as the original limitations
period had not yet expired. Id. at 1314-15
("The 'application of a statute of limitations
extended before the original limitations period has expired
does not violate the Ex Post Facto
Clause'") (quoting United States v. Grimes,
142 F.3d 1342, 1351 (11th Cir. 1998); citing United
States v. Wells Fargo Bank, N.A., 972 F.Supp.2d 593, 602
(S.D.N.Y. 2013); United States v. BNP Paribas SA,
884 F.Supp.2d 589, 608 (S.D. Tex. 2012)). Thus, the charges
in the indictment at issue in Arnold, which were
still timely as of the 2008 amendment of the WSLA, were
tolled by the WSLA amendment unless, as provided for in the
statute, there was a termination of hostilities. Id.
at 1315. Quoting from a 2011 Florida case, the
Arnold court noted that for charges "'for
which the limitations period had expired prior to the
effective date of the 2008 WSLA amendment, there is no
suspension of the limitations period pursuant to the
WSLA.'" Id. (quoting United States v.
Anghaie, No. 1:09-CR-37-SPM/AK, 2011 WL 720044, at *2
(N.D. Fla. Feb. 21, 2011)). But for ...