Russian Energy Company CFO Seeks Dismissal of FBAR, Other Tax Charges

UNITED STATES OF AMERICA
v.
MARK A. GYETVAY,
Defendant.

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISON

MOTION TO DISMISSTHE SECOND SUPERSEDING INDICTMENT

Mark A. Gyetvay, by and through counsel, moves for dismissal of the Second Superseding Indictment filed in this case (ECF Doc. 101 (the “Indictment”)) pursuant to Rule 12(b) of the Federal Rules of Criminal Procedure (“Rule 12(b)”) on the basis that all of the counts charged in the Indictment are barred by the relevant limitations periods and because the government has failed to allege any exception or tolling provision to the applicable statutes of limitation on the face of the Indictment. See United States v. Salman, 378 F.3d 1266, 1269 (11th Cir. 2004) (“By now it has become well-established that the sufficiency of a criminal indictment is determined from its face.”) (citation, quotation marks, and alternation omitted).

The government's failure to do so in this case is fatal to the Indictment, which should be dismissed in its entirety.

1. Background

The Second Superseding Indictment was filed against Mr. Gyetvay on May 4, 2022 and charged him with aiding or assisting with the preparation and filing of false tax returns, tax evasion, failing to file tax returns, failing to file Foreign Bank Account Reports (FBARs), making false statements to the government, and engaging in wire fraud. See ECF Doc. 101.

Statutes of limitation “protect individuals from having to defend themselves against charges when the basic facts may have become obscured by the passage of time.” Toussie v. U.S, 397 U.S. 112, 114–15 (1970). Moreover, “criminal limitations statutes are 'to be liberally interpreted in favor of repose.'” Id. at 115 (quoting U.S. v. Scharton, 285 U.S. 518, 522 (1932)). In the Eleventh Circuit, “[w]hen doubt exists about the statute of limitations in a criminal case, the limitations period should be construed in favor of the defendant.” U.S. v. Gilbert, 136 F.3d 1451, 1454 (11th Cir. 1998). A motion to dismiss an indictment on grounds that are apparent from the face of the indictment, including statute of limitations, must be brought pre-trial under Rule 12(b), or else the defense is deemed waived. U.S. v. Ramirez, 324 F.3d 1225, 1227-1229 (11th Cir. 2003).¹

2. The Title 26 Counts Are Untimely on Their Face

a. The False Tax Return Counts (Counts One through Three)

The government alleges that Mr. Gyetvay aided or assisted the preparation of false income tax returns in violation of 26 U.S.C. § 7602(2) for the 2006, 2007, and 2008 tax years. See Indictment ¶¶ 38-39. The limitations period for these counts is six years. See 26 U.S.C. § 6531(3).

The government claims on the face of the Indictment that Mr. Gyetvay filed a false 2006 tax return on February 16, 2011. See Indictment ¶ 39 (Count One). The statute of limitations for this alleged wrongful act expired on or about February 16, 2017. See 26 U.S.C. § 6531(3). The government next alleges that Mr. Gyetvay filed a false 2007 tax return on November 2, 2011. See Indictment ¶ 39 (Count Two). The statute of limitations for this alleged wrongful act expired on or about November 2, 2017. See 26 U.S.C. § 6531(3). Lastly, the government alleges that Mr. Gyetvay filed a false 2008 tax return on February 19, 2013. See Indictment ¶ 39 (Count Three). The statute of limitations for this alleged wrongful act expired on or about February 19, 2019. See 26 U.S.C. § 6531(3).

As noted above, the operative Indictment was filed on May 4, 2022, and it is devoid of any factual assertions that an exception to 26 U.S.C. § 6531(3) is applicable or that the limitations periods described above were tolled. For example, 26 U.S.C. § 6531 contains an exception for time during which a person is outside the United States within the meaning of Section 3290 of Title 18. However, the Indictment contains no such allegations and, to the contrary, the indictment alleges that Mr. Gyetvay met the U.S. residency requirement under the IRS's Streamlined Offshore Program (i.e., that he had an abode in the United States and was present in the United States for more than 330 days during the 3-year period prior to his Streamlined Offshore Request). See Indictment ¶ 35. Accordingly, on the face of the Indictment, the limitations periods within which the government could have charged Mr. Gyetvay with filing false income tax returns for tax years 2006, 2007, and 2008 all expired well prior to the filing of the Indictment. Therefore, counts One through Three should be dismissed as untimely.

b. The Tax Evasion Counts (Counts Four through Six)

The government alleges on the face of the Indictment in Counts Four and Five — which contain identical allegations — that Mr. Gyetvay committed tax evasion for the 2007 and 2008 tax years in violation of 26 U.S.C. § 7201 by, inter alia, not timely paying his federal income tax liabilities for those years. See Indictment ¶ 41. The government also alleges several “affirmative acts of evasion.” Indictment ¶¶ 41(a)-(i). Yet the latest act alleged as to Counts Four and Five occurred on July 18, 2015 — which is nearly seven years prior to the date of the Indictment. The Indictment was filed on May 4, 2022, and it alleges no facts that would justify an exception to (or tolling of) the limitations period under 26 U.S.C. § 6531(2). Counts Four and Five are untimely on their face and should be dismissed.

The government alleges on the face of the Indictment in Count Six that Mr. Gyetvay committed tax evasion for the 2009 tax year in violation of 26 U.S.C. § 7201 by, inter alia, not filing an income tax return for 2009. See Indictment ¶ 43. The government is wrong. Mr. Gyetvay did, in fact, file a 2009 return and the government has not asserted that the 2009 return as filed was incorrect, much less false. The government goes on to allege a number of additional purported acts in connection with Count Six, all of which are beyond the applicable six-year limitations period. See 26 U.S.C. § 6531(2). The latest act alleged occurred on July 31, 2015 — which again is nearly seven years prior to the Indictment. The Indictment was filed on May 4, 2022, and it asserts no facts that would justify an exception to (or tolling of) the limitations period under 26 U.S.C. § 6531(2). Count Six is untimely on its face and should be dismissed.

c. The Failure to File Counts (Counts Seven through Eleven)

The government alleges on the face of the Indictment that Mr. Gyetvay willfully failed to file income tax returns for the 2010, 2011, 2012, 2013, and 2014 tax years in violation of 26 U.S.C. § 7203. See Indictment ¶¶ 44-45. Again, the government is wrong. As the government well knows, Mr. Gyetvay filed returns for all of these tax years: (1) he filed his 2010 tax return on April 3, 2017; (2) he filed his 2011, 2012, and 2013 tax returns on August 13, 2015, pursuant to the IRS's Streamlined Offshore Program; and (3) he filed his 2014 return on March 29, 2017. The government has not alleged that the 2010 through 2014 returns as filed are incorrect, much less false. The government's allegations are subject to the six-year limitations period applicable to Title 26 offenses. See 26 U.S.C. § 6531(4). And again, the government's claims are untimely.

In cases where a defendant is charged with a failure to file an income tax return, the limitations period begins to run on the date that the return was due. See United States v. Phillips, 843 F.2d 438, 443 (11th Cir. 1988). Count Seven alleges that the deadline for filing Mr. Gyetvay's 2010 return was October 17, 2011. See Indictment ¶ 45. The six-year limitations period expired on October 17, 2017. See 26 U.S.C. § 6531(3). Count Eight alleges that the deadline for filing Mr. Gyetvay's 2011 return was October 15, 2012. See Indictment ¶ 45. The limitations period expired on October 15, 2018. See 26 U.S.C. § 6531(3). Count Nine alleges that the 2012 filing deadline was October 15, 2013. See Indictment ¶ 45. The limitations period expired on October 15, 2019. See 26 U.S.C. § 6531(3). Count Ten alleges that the 2013 filing deadline was October 15, 2014. See Indictment ¶ 45. The limitations period expired on October 15, 2020. See 26 U.S.C. § 6531(3). Count Eleven alleges that the 2014 filing deadline was April 15, 2015. See Indictment ¶ 45. The limitations period expired on April 15, 2021. See 26 U.S.C. § 6531(3). The Indictment in this case was not filed until May 4, 2022 and fails to allege any facts suggesting that an exception to 26 U.S.C. § 6531(4) is warranted or that the limitations period was otherwise tolled. Therefore, the Court should dismiss Counts Seven through Eleven as untimely.

3. The Non-Title 26 Counts Are Also Untimely On Their Face

a. The False Statements Count (Count Twelve)

The government alleges on the face of the Indictment that Mr. Gyetvay made false statements to the government through submissions to IRS in violation of 18 U.S.C. §§ 1001 and 2. See Indictment ¶¶ 46-47. This charge is subject to a five-year statute of limitations period. See 18 U.S.C. § 3282. Count Twelve, however, plainly alleges that Mr. Gyetvay made the false statements or representations at issue “[o]n or about and between July 1, 2015 and August 8, 2015[.]” Indictment ¶ 47. The statute of limitations governing these alleged false statements expired on August 8, 2020, at the latest. Count Twelve should therefore also be dismissed.

b. The FBAR Count (Count Thirteen)

The government alleges on the face of the Indictment that Mr. Gyetvay willfully failed to file an FBAR for calendar year 2014 in violation of 31 U.S.C. §§ 5314, 5322(a), and several related federal regulations. See Indictment ¶¶ 48-49. However, the government admits that Mr. Gyetvay filed his 2014 FBAR on June 25, 2015, prior to the due date of June 30, 2015. See id. ¶¶ 31, 53. Moreover, Mr. Gyetvay filed a corrected 2014 FBAR on March 27, 2017, which was before the government claims it began its investigation. This non-Title 26 charge is also subject to the standard five-year limitations period applicable to most federal crimes under 18 U.S.C. § 3282. Again, the government plainly alleges conduct that simply does not fall within the limitations period. Specifically, Count Thirteen alleges that Mr. Gyetvay failed to file an FBAR for the 2014 calendar year on or before June 30, 2015. Id. ¶ 49. The statute of limitations for the failure to file a 2014 FBAR therefore expired on June 30, 2020. See 18 U.S.C. § 3282. As such, Count Thirteen should be dismissed as untimely.

c. The Wire Fraud Counts (Counts Fourteen and Fifteen)

Lastly, the government alleges on the face of the Indictment that Mr. Gyetvay engaged in wire fraud in 2015 by allegedly transmitting false communications to the Department of Treasury and an unnamed individual or individuals. See Indictment ¶ 53. Once again, these allegations are subject to a five-year limitations period and are therefore untimely. See 18 U.S.C. § 3282. Specifically, Court Fourteen alleges that on June 25, 2015, Mr. Gyetvay transmitted a false wire communication to the Treasury Department (i.e., when he timely filed his 2014 FBAR). See Indictment ¶ 53. The statute of limitations for this alleged wrongful act expired on June 25, 2020. See 18 U.S.C. § 3282. Count Fifteen alleges that on July 17, 2015, Mr. Gyetvay transmitted an email to an unnamed individual or individuals approving a statement for subsequent submission to the IRS. See Indictment ¶ 52. The statute of limitations for this alleged wrongful act expired on July 17, 2020. See 18 U.S.C. § 3282. For these reasons, Counts Fourteen and Fifteen should also be dismissed.

4. In the alternative, the Court should rule pretrial on the government's asserted exceptions to the statute of limitations.

Based on the stale nature of the charges here and the time and resources of the parties and the Court needed to try this case, Mr. Gyetvay respectfully requests that the Court either grant his Motion to Dismiss or require the government to present sufficient admissible evidence at a hearing prior to trial to prove its purported exceptions to the statutes of limitation. Although there are no allegations in the Indictment to support an exception to the applicable statutes of limitation, the government raised two exceptions in response to a prior motion to dismiss which was rendered moot when the government superseded the indictment. See ECF Docs. 40, 72. In its prior response, the government cited to the tolling provisions of 18 U.S.C. § 3292 (pending requests for foreign evidence) and 26 U.S.C. § 6531 (time spent outside the United States) to save the government's charges from dismissal. ECF Doc. 40 at 4-8. Mr. Gyetvay replies to each argument in turn.²

First, Mr. Gyetvay has sought discovery from the government relevant to this motion, but the government has steadfastly refused to produce records it has in its possession. Mr. Gyetvay was forced to file a Motion to Compel under Rule 16 for these and other records, which remains pending. ECF Doc. 117 (the “Motion to Compel”). Mr. Gyetvay believes that with the records he seeks in the Motion to Compel, the assertions made by the government in its Ex Parte Applications to Suspend the Running of the Statute of Limitations under 18 U.S.C. § 3292 (the “Tolling Applications”) will be contradicted. ECF Doc. 117 at 10-14.

With respect to tolling of the statute of limitations, Section 3292 provides:

Upon application of the United States, filed before return of an indictment, indicating that evidence of an offense is in a foreign country, the district court before which a grand jury is impaneled to investigate the offense shall suspend the running of the statute of limitations for the offense if the court finds by a preponderance of the evidence that an official request has been made for such evidence and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country.

18 U.S.C. § 3292(a) (emphasis added). Under the plain text of the statute, the government must prove that at the time each official request was made that evidence of each offense for which tolling was sought reasonably appeared at the time of the request to be located in the foreign country. U.S. v. Trainor, 376 F.3d 1325 (11th Cir. 2004) (“[i]n construing a statute we must begin, and often should end as well, with the language of the statute itself.”). Notably, the government's Tolling Applications never requested tolling for willful failure to file tax returns in violation of 26 U.S.C. § 7203 — i.e., Counts Seven through Eleven of the Indictment.

Importantly, evidence of certain offenses, like the failure to file tax returns or FBARs, was located in the United States. Therefore, a foreign evidence request was irrelevant for those counts. Moreover, the government had in its possession or within reach via grand jury subpoenas the records concerning the years under indictment. That is, at the time of the request for a tolling order, the government had Mr. Gyetvay's amnesty filings, tax, returns and FBARs; subpoena responses from the law firm that advised Mr. Gyetvay with respect to his amnesty filings; and subpoena responses from the accountants who prepared his returns.

This Court has the authority to review the sufficiency of the government's tolling requests prior to Mr. Gyetvay's trial. Whether a statute of limitations is properly tolled by foreign evidence requests is a legal question for the Court. See U.S. v. Wilson, 322 F.3d 353, 359 (5th Cir. 2003) (reversing the denial of a motion for reconsideration of a motion to dismiss based on the statute of limitations because government failed to prove tolling under Section 3292). Wilson is instructive because the court first remanded the case for an evidentiary hearing on whether the statute of limitations was tolled. Id. at 355-56. On remand, the government failed to meet its burden and the court reversed the conviction and vacated the sentence. Id. at 364.

Section 3292 is intended to compensate for “delays attendant in obtaining records from other countries.” H.R. Rep. No. 98–907, at 2–3 (1984), reprinted in 1984 U.S.C.C.A.N. 3579. It does not to allow the government to extend criminal statute of limitations at its election by requesting foreign evidence it already possesses, does not need, or that does not relate to the specific offenses in an indictment. “This provision should not be an affirmative benefit to prosecutors . . . It is not a statutory grant of authority to extend the limitations period by three years at the prosecutors' option.” U.S. v. Meador, 138 F.3d 986, 993 (5th Cir. 1998) (emphasis added).

In Trainor, the Eleventh Circuit held that the government's tolling application was based on unreliable assertions. See 376 F.3d at 1332 (“[t]he critical problem with the Government's tolling application in this case is that there is nothing to indicate the Government's assertions are reliable”). The unreliability was based on the fact that the request was not sworn or verified and suffered from a “lack of detail.” Id. at 1334. In Trainor, as in Wilson, the government failed to meet its burden under Section 3292. Here, the government's claim that each offense should be tolled under Section 3292 suffers from unreliable assertions and facts concealed from the district court when applying for a tolling order during the grand jury phase of this case.

The Fifth Circuit recently held that a defendant in a criminal tax case involving foreign evidence requests was deprived of his statute of limitations defense. United States v. Pursley, 22 F.4th 586 (5th Cir. 2022). In that case, like here, the government attempted to extend the applicable six-year statute of limitations period with tolling orders under Section 3292. But, despite the defendant timely raising the defense, the district court neglected to resolve the factual issues surrounding the length of time the statute of limitations was suspended. Id. at 592. As a result, the defendant's convictions were vacated, and the case was remanded:

Pursley was entitled to have the district court fully consider his statute of limitations defense, to have the district court calculate the exact time the statute of limitations ran under existing precedent, to dismissal of any charge that was untimely under that calculation, and to a jury instruction on the statute of limitations defense.

Id. at 593. Absent dismissal, Mr. Gyetvay seeks the same determination by the Court as in Pursley.

Second, the same defect applies to the government's argument that the statutes of limitation for the Title 26 offenses charged are tolled due to Mr. Gyetvay's alleged time spent outside the United States. As with Section 3292, courts are permitted to consider whether the tolling of a limitations period is appropriate under 26 U.S.C. § 6531. See U.S. v. Bardina, 365 F. Supp. 459 (S.D.N.Y. 1973) (granting motion to dismiss indictment where defendant who had been in Puerto Rico had not been “outside the United States”). That is especially necessary in this case where a number of the tax counts would require several years of tolling to escape the six-year statute of limitations. Count 1, for example, expired over four years ago, that is, the government would have to establish that Mr. Gyetvay spent approximately 1,700 days outside the United States.

Mr. Gyetvay should not be forced to try the case on charges this stale without the government first timely producing all discovery required by Rule 16 and related authority and mustering admissible evidence on a count-by-count basis at a pre-trial evidentiary hearing. For example, the government has only recently produced airline records and CBP/DHS TECS database records, which are used to screen arriving travelers.

Not a single one of the 15 counts alleged in the Indictment were brought within the relevant statute of limitation provision. As the government concedes in its prior Response, each offense charged relies on one or more exceptions to the otherwise applicable statute of limitations period, ECF Doc. 40, yet the government's offer of proof to-date is insufficient to prove the asserted exceptions to the statutes of limitation and answer serious questions surrounding its Tolling Applications.

5. Conclusion

For the reasons set out above, all of the charges filed by the government in this case are untimely on the face of the Indictment and should therefore be dismissed. In the alternative, an evidentiary hearing should be conducted on the issue of the government's asserted exceptions to the applicable statutes of limitation.

Respectfully submitted,

Kevin Downing
(Admitted pro hac vice)
Law Offices of Kevin Downing
601 New Jersey Avenue NW
Suite 260
Washington, D.C. 20001
Tel: 202-754-1982
Email: kevindowning@kdowninglaw.com
Attorney for Defendant Mark A. Gyetvay

Matthew J. Mueller, FBN: 0047366
FOGARTY MUELLER HARRIS, PLLC
501 E. Kennedy Blvd.
Suite 790
Tampa, Florida 33602
Tel: 813-682-1730
Fax: 813-682-1731
Email: matt@fmhlegal.com
Attorney for Defendant Mark A. Gyetvay