United States v. DeGeorge
380 F.3d 1203 (2004)
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Rule of Law:
Under 18 U.S.C. § 3292, the statutory phrase 'the district court before which a grand jury is impaneled to investigate the offense' is a venue requirement specifying which court may issue a tolling order, not a substantive requirement that a grand jury must be actively investigating the specific offense at the time of the application.
Facts:
- In June 1992, Rex K. DeGeorge, an attorney, contracted with an Italian firm to build a yacht, the Principe di Pictor, for $1.9 million.
- Between July and October 1992, DeGeorge orchestrated a series of sham transactions through corporations he controlled (Continental Pictures Corp., Polaris Pictures Corp., and U.S. Inbanco, Ltd.) to artificially inflate the yacht's apparent value to $3.6 million without any actual money changing hands.
- DeGeorge had a history of three prior insured vessel losses, and to conceal this and his ownership, he had his corporation Polaris purchase a $3.5 million insurance policy from Cigna, listing the inflated value and omitting his name.
- On November 4, 1992, DeGeorge, Paul Ebeling, and Gabriel Falco began the yacht's maiden voyage from Italy, and the next day in Naples, DeGeorge dismissed the professional captain and crew.
- During the night of November 6, 1992, DeGeorge directed his associates to cut holes in the yacht with power tools in an attempt to scuttle it for the insurance money.
- When the yacht failed to sink and Italian authorities approached the next morning, the three men abandoned ship and DeGeorge concocted a cover story that they were hijacked by a Russian submarine captain named 'Libovich' who tried to sink the vessel.
- DeGeorge and his associates consistently told the 'Libovich' story to Italian authorities and later used it as the basis for an insurance claim submitted to Cigna.
Procedural Posture:
- Cigna Property and Casualty Insurance Company filed a civil lawsuit in federal district court against DeGeorge, Polaris, and others, seeking rescission of the insurance contract.
- Polaris filed a counterclaim for payment under the policy.
- The district court in the civil case granted summary judgment to Cigna and awarded it attorney's fees; this judgment was affirmed on appeal.
- The civil trial judge referred the matter to the U.S. Attorney’s Office for a possible perjury investigation.
- The government filed an ex parte application in U.S. District Court for an order under 18 U.S.C. § 3292 to suspend the statute of limitations, which the court granted.
- A federal grand jury indicted DeGeorge for mail fraud, wire fraud, and perjury; a superseding indictment later added a conspiracy charge.
- In the U.S. District Court, DeGeorge moved to dismiss the fraud counts as time-barred due to an improper tolling order; the court denied the motion.
- DeGeorge's petition for a writ of mandamus to the U.S. Court of Appeals for the Ninth Circuit on the statute of limitations issue was denied.
- Following a trial in U.S. District Court, a jury convicted DeGeorge on all 16 counts. DeGeorge then appealed his conviction and sentence to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does the phrase 'the district court before which a grand jury is impaneled to investigate the offense' in 18 U.S.C. § 3292 require the government to demonstrate that a grand jury is actively investigating the specific offense before a court can suspend the statute of limitations to obtain foreign evidence?
Opinions:
Majority - Gibson, Senior Circuit Judge
No. The statutory language in 18 U.S.C. § 3292 requiring an application be made to 'the district court before which a grand jury is impaneled' serves as a venue requirement, not a substantive prerequisite of an active investigation into the specific offense. The court adopted the government's interpretation because it better reflects the practical realities of grand jury investigations, where grand juries are continuously impaneled and only rarely called to investigate particular offenses from the outset. Requiring an active investigation before tolling the statute of limitations would be inefficient and could frustrate the purpose of the statute, as the government might need the foreign evidence to even begin a grand jury presentation. Furthermore, such a requirement would conflict with the 18-month limit on a grand jury's service, potentially preventing the government from using the full three-year tolling period allowed by the statute. The court expressed confidence that district courts can prevent abuse of this provision by ensuring the government meets its burden of proving an official request for foreign evidence has been made.
Analysis:
This decision clarifies a key procedural aspect of federal criminal law involving international investigations, resolving an issue of first impression in the Ninth Circuit. By interpreting the 'impanelled grand jury' language in 18 U.S.C. § 3292 as a venue provision, the court lowers the procedural hurdle for prosecutors seeking to toll the statute of limitations in cases requiring evidence from abroad. This gives the government greater flexibility to pursue complex, transnational criminal schemes without having to prematurely initiate a grand jury proceeding. The ruling streamlines the process for obtaining foreign evidence, though it relies on the diligence of district courts to act as a check against potential prosecutorial abuse of the tolling provision.
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