Reasonable minds can (and certainly do) differ on the value of the conflicts in Afghanistan and Iraq. While critics may argue that the conflicts have accomplished nothing, they have indisputably served at least one purpose: They have extended the statute of limitations for criminal fraud claims asserted by the government in a case in Boston.
In U.S. v. Prosperi , the defendants were charged with conspiracy, mail fraud and making false statements in connection with the “Big Dig.” The defendants argued that counts based on conduct that occurred more than five years prior to the indictment were time-barred. In response, the government argued that the Wartime Suspension of Limitations Act tolled the statute of limitations. The Suspension Act, 18 U.S.C. § 3287, states: “When the United States is at war the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof… shall be suspended until three years after the termination of hostilities as proclaimed by the President or by a concurrent resolution of Congress.”
In Prosperi , Judge Richard G. Stearns, agreed with the government and allowed the Afghanistan and Iraq wars to toll the statute of limitations. In applying the Suspension Act, Stearns held that the fraud against the government need not be related to the war effort, so long as it was pecuniary in nature. According to Stearns, because war interrupts a country’s criminal enforcement efforts, Congress passed the Suspension Act to allow the government time after the war ends to prosecute acts that occurred during or before the war. Since the fraud charged in Prosperi was clearly “pecuniary in nature,” the crux of the issue was whether the United States had been “at war.”
Stearns first recognized that a confrontation need not be officially declared a war in order to be considered a “war” pursuant to the Suspension Act. Thus, the fact that the United States’ last declared war was World War II was irrelevant. To determine whether the United States was at war, Stearns looked at whether Congress had authorized the use of force, whether the conflicts could be deemed “wars” under accepted definitions from international law, the size and scope of the conflicts and the extent of the diversion of the government’s resources.
First, Congress clearly authorized the use of force. On Sept. 18, 2001, Congress passed the Authorization for Use of Military Force, granting the president power to use all “necessary and appropriate force” against “those nations, organizations or persons” responsible for the attacks on Sept. 11, 2001. The United States then engaged in military operations against the Taliban in Afghanistan. On Oct. 11, 2002, Congress passed the Authorization for the Use of Military Force Against Iraq. On March 20, 2003, the United States initiated Operation Iraqi Freedom.
Second, to determine whether either military engagement met international law definitions of “war,” the court conducted a broad review of literature, starting with Hugo Grotius’ “On The Law of War and Peace” published in 1625. Grotius stated that a formal declaration of war was necessary, as it demonstrated that the action was not a private undertaking but the will of the state. More contemporary definitions of war have deemphasized the declaration and have focused more on the nature of the conflict. Ultimately, Stearns’ reading of various international treatises, international tribunal cases and three dictionaries, led him to conclude that the two military engagements met accepted definitions of “war.”
Third, the court looked at the duration and casualties associated with both conflicts. The Congressional Research Service estimated that the Afghan and Iraq conflicts cost $859 billion between 2001 and 2008. Adjusted for inflation, that surpassed all prior wars except World War II. Military involvement in Iraq has continued for almost six years, longer than the time U.S. forces spent in combat in World War I and World War II combined. The Department of Defense reported a combined 4,589 U.S. military casualties as of June 2008. This is more than the casualties suffered in the Revolutionary War (4,435), the War of 1812 (2,260), the Mexican-American War (1,733), the Spanish-American War (385) and the Persian Gulf conflict (147).
Finally, the court looked at the burden on governmental resources. To counter terrorism, Congress enacted the PATRIOT Act, created the Department of Homeland Security and overhauled the Foreign Intelligence Surveillance Act. Furthermore, the FBI underwent a major reorganization and shifted significant resources from the investigation of conventional crime to terrorism. Since Sept. 11, the FBI has referred more than 7,000 terrorism cases to the Department of Justice, over 2,000 of which resulted in prosecution. At the same time, the number of federal criminal prosecutions fell from 19,000 to 12,000 cases, the majority of the reduction coming in white-collar and organized crime cases. Specifically, white-collar crime referrals dropped from 10,000 cases in 2000 to about 3,500 in 2005. The court found it irrelevant that there was no evidence that this shift in resources hampered the Big Dig, as the post-Sept. 11 shift of resources clearly reduced the prosecution of fraud cases generally.
Given this analysis, Stearns held that the Suspension Act applied. The Afghanistan War began Sept. 18, 2001, when Congress passed the Authorization for Use of Military Force and ended Dec. 22, 2001, when the United States extended full diplomatic relations to Afghanistan. The Iraq War (or invasion phase) began Oct. 11, 2002, when Congress passed the Authorization for the Use of Military Force Against Iraq and the invasion ended May 1, 2003, when President Bush proclaimed that combat operations had ceased in Iraq. The Afghanistan War therefore tolled the statute of limitations until Dec. 22, 2004, while the Iraq War tolled it until May 1, 2006. Thus, claims in Prosperi dating from as far back as 1999 were not time-barred.
No other courts have applied the Suspension Act to Afghanistan or Iraq. Indeed, caselaw on the Suspension Act is sparse. Stearns’ decision will not be appealable unless and until the defendants are convicted and sentenced. It is also not clear how widely the government intends to rely on the Suspension Act.
Nevertheless, if Prosperi stands and is relied upon by other courts, the statute of limitations on fraud based claims against the government will be tolled for the period from Sept. 18, 2001, (the start of the Afghanistan conflict) until May 1, 2006, (the end of the Iraq conflict). Thus, the government would have until May 2011 (i.e., three years after cessation of the Iraq War provided by the Suspension Act plus five-year statute of limitations) to assert pecuniary fraud claims relating to conduct that occurred during the period from September 2001 to May 1, 2003.
It also appears from Prosperi that the government can extend the statute of limitations for claims arising before the start of the Afghanistan conflict by excluding the nearly five-year period of time during which the Suspension Act applied from the running of the statute. It is not clear how broadly the Suspension Act will be asserted or applied. It is clear, however, that a broad application of Prosperi would substantially increase the government’s reach in prosecuting fraud claims. •
Sehyung Lee is an associate in Dilworth Paxson’s corporate investigations and white-collar group. Lee received his law degree from Temple University’s Beasley School of Law and his B.S. degree from University of Pennsylvania’s Wharton School of Business. He can be reached at slee@ dilworthlaw.com .
David M. Laigaie, a partner at the firm, heads the corporate investigations and white-collar group. His areas of practice include health care fraud, securities fraud, tax fraud, export violations, pharmaceutical marketing fraud, municipal corruption, defense procurement fraud and public finance fraud. He regularly conducts internal corporate investigations. He can be reached at 215-575-7168 or firstname.lastname@example.org .