790 F.3d 365
2d Cir.2015Background
- Defendants Gary Heinz, Michael Welty, and Peter Ghavami, UBS employees, were indicted and convicted for conspiracy to commit wire fraud; Heinz and Ghavami also convicted of substantive wire fraud related to manipulation of municipal bond reinvestment agreement bidding and other municipal finance contracts.
- Defendants moved to dismiss the superseding indictment as time-barred, arguing applicable statutes of limitations were five or six years and that the charged transactions were older than that when the indictment was filed.
- The Government relied on settlement and non-prosecution agreements (the “Bank Agreements”) that UBS and two other banks entered into with DOJ, federal agencies, and state attorneys general, which admitted wrongdoing, accepted responsibility for former employees, and paid over $500 million in fines/restitution and incurred legal fees.
- The District Court concluded the evidence could allow a jury to find the offenses “affected a financial institution” under 18 U.S.C. § 3293(2), extending the limitations period to ten years, and denied the dismissal motion; parties later stipulated that each charged offense, if proven, affected a financial institution.
- Defendants preserved their statute-of-limitations challenge for appeal; the Second Circuit affirmed, holding the offenses affected the banks because the Bank Agreements and resulting financial consequences were foreseeable and sufficiently direct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ten-year limitations period under 18 U.S.C. § 3293(2) applies | Gov: § 3293(2) applies if the offense affected a financial institution; evidence (Bank Agreements) shows it did | Defs: Apply 5- or 6-year limitations; charged transactions occurred outside that period | Held: § 3293(2) applies; ten-year period governs because the fraud sufficiently affected the banks |
| Whether settlements admitting wrongdoing can show a bank was affected | Gov: Bank Agreements admitting wrongdoing and payments show banks were affected | Defs: Bank role as co-conspirator severs link or is insufficient to trigger § 3293(2) | Held: Admissions and financial consequences in Bank Agreements suffice; co-conspirator status does not break the link |
| Whether payments and fees incurred by banks were foreseeable to defendants | Gov: Payments and legal fees were foreseeable consequences of the fraud | Defs: Foreseeability not established or too attenuated | Held: Court: foreseeable and sufficiently direct; supports § 3293(2) application |
| Timeliness of indictment | Defs: Indictment untimely under shorter statutes of limitations | Gov: Timely under ten-year limitations | Held: Indictment timely under § 3293(2); motion to dismiss properly denied |
Key Cases Cited
- United States v. SKW Metals & Alloys, Inc., 195 F.3d 83 (2d Cir. 1999) (interprets the breadth of the verb “to affect” in § 3293(2))
- United States v. Bouyea, 152 F.3d 192 (2d Cir. 1998) (§ 3293(2) applies beyond cases where the financial institution is the direct object of fraud)