Should the Government’s Ability to Use Conspiracy Charges Be Limited?

    3 February 2014

    Last week, the Justice Department’s Antitrust Division (the “Division”) filed a motion for rehearing after significant criminal convictions were overturned on statute of limitations grounds. A conspiracy is deemed to continue until the last “overt act” in furtherance of the conspiracy, which means a conspiracy could conceivably occur over the course of several years. See 18 U.S.C. § 371. Any opinion that curtails the Justice Department’s ability to rely on conspiracy theory to expand the scope of illegal conduct alleged in an indictment, or to rely on subsequent conduct to satisfy statutes of limitation, has potentially significant consequences for antitrust conspiracy law going forward.

    The Division has investigated and prosecuted a number of alleged conspiracies in the municipal bond investment industry over the past few years, generally with a great deal of success. Federal prosecutors began investigating the industry due to suspicions that investment auctions were being rigged, resulting in artificially high prices for municipalities. Indeed, investigations of this type of conduct in California, New York and elsewhere have yielded dozens of criminal convictions, the defendants accepting plea bargains in most cases.

    In May 2012, three former investment executives were convicted of conspiracy to commit wire fraud and conspiracy to defraud the United States in connection with municipal investment auctions. During the three-week trial, the defendants argued that the charges against them were barred by applicable statutes of limitations.

    In United States v. Grimm, No. 12-4310, the U.S. Court of Appeals for the Second Circuit overturned the three convictions. The Second Circuit noted in a 2-1 decision that “overt acts have ended when the conspiracy has completed its influence on an otherwise legitimate course of common dealing that remains ongoing for a prolonged time, without measures of concealment, adjustment or any other corrupt intervention by any conspirator.”

    The Division’s motion for rehearing, filed on January 22, argues that the Second Circuit’s decision to overturn all three convictions was based on a misinterpretation of a previous case on which it relied. It also argues that “overt acts” in the form of long-term periodic payments related to the alleged conspiracies occurred within the statute of limitations.

    Due to the fact that antitrust crimes often have elements of concealment and may occur over long periods of time, they can be difficult and time-consuming to investigate. The Division would prefer to have as much time as possible to investigate these cases and has relied on conspiracy theories to expand the scope of its investigations and indictments.

    Will United States v. Grimm limit the Division’s ability to rely on conspiracy charges to prosecute conduct that occurred well in the past? We’ll have to wait and see.