• "Big Dig" Fraud Claims Tolled By Wartime Suspension Act
  • October 13, 2008 | Authors: Diana L. Erbsen; Ellis L. Reemer; Frank Joseph Jackson
  • Law Firm: DLA Piper - New York Office
  • Analysis Could Affect Statute of Limitations on Numerous Fraud Claims

    In United States v. Prosperi et al (U.S.D.C. Dist. MA. August 29, 2008), six defendants were “charged with conspiracy, mail fraud, and the making of false statements in connection with the federally financed Central Artery Tunnel Project in Boston,” known colloquially as the Big Dig.

    Defendants argued that 85 counts of highway project fraud and mail fraud were barred by a five-year statute of limitations. Absent a tolling of the statute, the claims would have been barred. However, the government argued that the rarely invoked Wartime Suspension of Limitations Act (the Suspension Act) tolled the running of the statute of limitations.

    The Suspension Act provides in relevant part that, “when the United States is at war the running of any statute of limitations applicable to any offense (i) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not….shall be suspended until three years after the termination of hostilities as proclaimed by the President or by a concurrent resolution of Congress.”

    In analyzing the applicability of the Suspension Act, Judge Richard Stearns evaluated four factors, including the size and scope of the conflict, to determine that the United States was:

    (1) at war with Afghanistan from September 18, 2001 when Congress authorized the President to use all “necessary and appropriate force” against “those nations, organizations or persons” responsible for the terrorist attacks of September 11, 2001 through December 22, 2001 when the United States extended full diplomatic relations to the new government of Hamid Karzai; and

    (2) at war with Iraq from the October 11, 2002 Congressional Authorization for the Use of Military Force Against Iraq until the May 1, 2003 declaration by President Bush that “[m]ajor combat operations in Iraq have ended. In the Battle of Iraq, the United States and our allies have prevailed. And now our coalition is engaged in securing and reconstructing that country.”

    The court analyzed and rejected defendants’ arguments that the Suspension Act is inapplicable because the United States is not “at war” and, even if the United States were “at war,” the government’s claims of fraud do not relate to military procurement. The court also analyzed when the period of being “at war” commenced and ended for purposes of applying the Suspension Act.

    Based on its findings of fact, and analysis of applicable law, the court held that the “Suspension Act [tolled] the limitations period for defendants’ alleged offenses from September 18, 2001, to May 1, 2006.”

    This decision, particularly if upheld by the First Circuit, could have wide-ranging implications for practitioners in many areas of law because, based on this reasoning, the statute of limitations on fraud claims by the United States, with regard to conduct that occurred between September 19, 2001 and May 1, 2006, would not even have begun to run until May 1, 2006.