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United States v. Canale

United States District Court, S.D. New York

June 17, 2015

UNITED STATES OF AMERICA
v.
PETER CANALE, Defendant.

OPINION & ORDER

KATHERINE B. FORREST, District Judge.

Before the Court is defendant's motion to dismiss the Indictment as time-barred or, in the alternative, to transfer this case to the Western District of Kentucky. (ECF No. 26.)[1] On June 12, 2015, the Court informed the parties on the record that it would deny defendant's motion and issue its decision in a separate order. This Opinion & Order sets forth the predicted rationale for the Court's decision.

I. BACKGROUND[2]

On October 28, 2014, a grand jury sitting in the Southern District of New York returned an Indictment charging Peter Canale ("defendant" or "Canale"), a resident of Kentucky, with one count of conspiracy to defraud the United States and to commit substantive tax offenses, in violation of 18 U.S.C. § 371. (Indictment ("Ind.") ¶¶ 1, 32, ECF No. 2.) The Indictment alleges that between about 1993 and April 2011, Canale conspired with others to open and maintain undeclared bank accounts in Switzerland - and to hide those accounts, and the income generated therefrom, from the Internal Revenue Service ("IRS"). (Ind. ¶ 12.) Specifically, the Indictment alleges that Canale, his brother Michael Canale, and a now-deceased relative of the brothers (the "Relative") worked with Swiss advisers Beda Singenberger ("Singenberger") and Hans Thomann ("Thomann") to establish and maintain undeclared accounts at Swiss banks. (See Ind. ¶¶ 1-4, 6, 13(a).) The Indictment further alleges that the Canale brothers used sham entities to conceal their ownership of the undeclared Swiss accounts from the IRS, filed false and fraudulent federal income tax returns which failed to report their interest in, and income from, the accounts, and failed to file Reports of Foreign Bank and Financial Accounts ("FBARs") disclosing their authority over the accounts.[3] (Ind. ¶¶ 13(b)-(d), 28-31.)

The Indictment alleges that the following overt acts occurred in the Southern District of New York in furtherance of the conspiracy:

1. In July 2000, the Relative, who maintained an undeclared account in Switzerland, introduced defendant to Thomann in Manhattan, New York, where they discussed the Relative's undeclared account. (Ind. ¶¶ 14, 16.)
2. In late 2000 or 2001, after the Relative's death, defendant and Michael Canale met with Thomann and Singenberger at a Manhattan hotel and discussed continuing to maintain the undeclared assets the two brothers had inherited from the Relative in an undeclared account for the brothers' benefit. (Ind. ¶¶ 17-18.)
3. In the mid-2000s, Michael Canale met with Singenberger in Manhattan to

discuss his undeclared account. (Id. ¶ 36(f).)

II. LEGAL STANDARDS

A. Statute of Limitations

"For offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, " the period of limitations is six years. See 26 U.S.C. § 6531(1); see also United States v. Aracri, 968 F.2d 1512, 1517 (2d Cir. 1992). For a § 371 conspiracy charge to be within the statute of limitations, (1) the conspiracy must still have been ongoing within the six-year period preceding the indictment, and (2) at least one overt act in furtherance of the conspiracy must have been performed within that period. United States v. Ben Zvi, 242 F.3d 89, 97 (2d Cir. 2001); see also United States v. Fletcher, 928 F.2d 495, 498 (2d Cir. 1991) ("The limitations period begins to run after the last overt act in furtherance of the main goals of the conspiracy." (citations omitted)); Grunewald v. United States, 353 U.S. 391, 396-97 (1957). The Government is not required to prove that each member of the conspiracy committed an overt act within the statute of limitations. See Hyde v. United States, 225 U.S. 347, 369-70 (1912); United States v. Read, 658 F.2d 1225, 1233-34 (7th Cir. 1981) (interpreting Hyde). "[T]he crucial question in determining whether the statute of limitations has run is the scope of the conspiratorial agreement, for it is that which determines both the duration of the conspiracy, and whether the act relied on as an overt act may properly be regarded as in furtherance of the conspiracy." United States v. Salmonese, 352 F.3d 608, 614 (2d Cir. 2003) (quoting Grunewald, 353 U.S. at 397) (internal quotation marks omitted).

B. Venue

A criminal defendant has the right to be tried in the "district wherein the crime shall have been committed." U.S. Const. amend. VI; see also id. art. III, § 2, cl. 3 ("The Trial of all Crimes... shall be held in the State where the said Crimes shall have been committed."); Fed. R. Crim. P. 18 ("Unless a statute or these rules permit otherwise, the government must ...


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