On July 2, 2018, a federal judge in California denied a defendant’s motion to dismiss a federal government’s wire fraud indictment on the basis that it was time-barred. See United States v. Bogucki, 18-cr-00021. The defendant, Bogucki, a trader at Barclays Bank, was alleged to have deceived Hewlett Packard in a 2011 options trade. In January 2018, the government filed an initial indictment charging Bogucki with one count of conspiracy to commit wire fraud and six counts of substantive wire fraud. In filing the original indictment, the government relied upon a tolling order it had obtained from the Court pursuant to 18 U.S.C. 3292 based upon the government’s assertion that evidence the government needed was in a foreign country. Thereafter, the Department of Justice closed its investigation of Barclays in return for certain conditions in a Declination Letter. In consideration for the government’s agreement not to prosecute, Barclays agreed to pay over $12 million in combined restitution and disgorgement. The government subsequently filed a superseding wire fraud indictment against Bogucki. In filing the superseding indictment, the government dropped its reliance on the tolling order and instead stated that it was solely relying on the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 18 U.S.C. 3293(2), which provides for a 10-year statute of limitations for wire fraud charges “if the [charged] offense affects a financial institution.”
The defendant moved to dismiss the superseding indictment as time barred, arguing that: 1) the government waived its right to rely on 18 U.S.C. 3293, and (2) that section does not apply because the alleged offense did not “affect a financial institution” within the meaning of the statute. The Court disagreed with defendant’s arguments and, thus, denied the motion to dismiss.
Specifically, the Court rejected the defendant’s argument that the Government had waived its reliance on 18 U.S.C. 3293(2), finding that the legal theory on which the defense premised its argument was unclear and unsupported by case law . With respect to the defendant’s argument that the government had not alleged an effect on Barclays or its trading partners sufficient for 18 U.S.C. 3293(2) to apply, the Court found that the defendant’s theory that the fraud did not, as a matter of law, have an effect on Barclays itself was incorrect.
First, the Court adopted the “self-affecting” theory in which the government can rely upon FIRREA’s 10-year statute of limitations on the basis that “a bank or bank employee can itself/himself affect a financial institution within the meaning of 1392(2),” as opposed to a third party defrauding the bank. Further, the Court rejected defendant’s argument that any harm to Barclays was not “sufficiently direct” to trigger the 10-year limitations period in section 3293(2). Rather, the Court found that 18 U.S.C. 3293(2) encompasses a broad range of possible “effects” including that defendant’s conduct exposed Barclays to risk of loss through litigation or regulatory proceedings, risk of loss caused by harm to the bank’s reputation, and risk of exposing Barclays to an increased risk of loss in trading. The Court, however, rejected the government’s argument that an “effect” could include risk to the bank’s counterparties on the basis that Barclays’ counterparties would not have standing to sue the defendant, Bogucki, or Barclays and any risk of loss resulted from their own trading decisions. Nevertheless, because the Court found that the government had identified the other possible effects on Barclays, the Court denied Bogucki’s motion to dismiss the superseding indictment as time-barred.
Bryant is a Partner at PIB Law and focuses his practice on the representation of financial institutions in connection with financial services-related litigation matters. He also represents and counsels corporate clients in a wide ...