United States v. Gentile: Motion to Dismiss for Untimely Indictment Granted
In United States v. Gentile, No. 16-cr-00155 (JLL), (D.N.J. Jan. 30, 2017), the United States District Court for the District of New Jersey granted Guy Gentile’s (“Defendant”) motion to dismiss an indictment for securities fraud violations. The court held the defendant unknowingly extended the statute of limitations and the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (“Dodd-Frank”) statute of limitations did not apply retroactively. Therefore, the original five-year statute of limitations in 18 U.S.C. § 3282(a) applied.
According to allegations, Defendant was indicted for securities fraud violations connected to “pump-and-dump schemes” occurring between April of 2007 and June 2008. The statute of limitations at the time the alleged criminal activity had ceased was five years. 18 U.S.C. § 3282(a). Defendant, acting in cooperation with the Government, signed two waivers tolling “any statute of limitations” relating to the charges through July of 2014. Defendant then refused to sign a third tolling waiver, stating he wanted the entire matter to be resolved by June 30, 2015. In June 2015, Defendant rejected the Government’s felony disposition plea agreement, and was indicted on March 23, 2016.
Defendant moved to dismiss the indictment, asserting it was untimely on two different grounds. First, Defendant argued the six-year statute of limitations in Dodd-Frank was inapplicable because the alleged criminal acts took place prior to the statute’s enactment. As a result, the five-year statute of limitations remained the applicable time period. Second, Defendant argued that, if the six-year statute of limitations applied, the waivers were signed unknowingly and therefore invalid. Defendant asserted both he and the Government were operating under the assumption the proper statute of limitations was five years when he signed both tolling waivers. Defendant maintained he signed both tolling waivers without knowledge or a clear understanding as to the rights subject to waiver.
In deciding the validity of the waivers, the court equated waiving a statute of limitations to that of a plea bargain in abandoning a statutory right. For a waiver involving the relinquishing of rights to apply, a party must have an informed understanding of the consequences of the waiver. Furthermore, a presumption existed against retroactive legislation. Retroaction application required a clear manifestation from Congress that the presumption did not apply.
The court first found the waivers invalid. The Defendant had unknowingly executed both tolling waivers. By waiving specific and important rights, Defendant would unknowingly extend his liability an additional three years rather than the two years he had expected. As a result, the statute expired under the five-year statute of limitations on June 30, 2013, and under the six-year statute of limitations on June 30, 2014. As a result, the indictment was untimely.
The court further held the six-year statute of limitations created by Dodd-Frank inapplicable to the Defendant because Section 3301 of Dodd-Frank contained no discussion or mention of intent to apply the section retroactively to crimes committed prior to enactment.
For the above reasons, the United States District Court for the District of New Jersey granted Defendant’s motion to dismiss.
The primary materials for this case may be found on the DU Corporate Governance website.