Shane Rader
Embezzlement is a crime most often committed by employees in a position of trust and, if well concealed, it can span decades. In most statutes, embezzlement is broadly defined as the misappropriation of property by someone who has legal possession. When prosecutors charge defendants with long-term embezzlement (more than five years) they often try—unsuccessfully—to apply the continuing offense doctrine, which is an exception to the statute of limitations. This doctrine tolls the traditional five-year statute of limitations (which normally begins running on the date of the embezzlement transaction) until the date of the last transaction. This would provide two solutions to common problems with embezzlement: (1) it allows prosecutors to charge defendants with the entire amount embezzled, which leads to heftier sentences; and (2) it enables courts to order full restitution, thus giving victims the opportunity to make a complete recovery.
It seems intuitive that embezzlement be classified as a continuing offense, especially in situations where the crime is repetitious and long-term in nature. However, the Supreme Court’s vague restrictions on the continuing offense doctrine in Toussie v. United States, 397 U.S. 112 (1970), have led many federal circuit courts of appeals to not allow its application in cases of embezzlement. Because of this, both prosecutors and victims of long-term embezzlement are limited in the amount they can both charge and recover from defendants. This is particularly concerning because long-term offenses make up 28.7% of embezzlement cases in federal court.
In Toussie, the Court developed and applied a two-prong test for determining when the continuing offense doctrine may be used. First, the doctrine applies if the explicit language of the statute is strong enough to compel a court to conclude that the crime was intended to be a continuing offense. Second, it applies if the nature of the crime involved is such that Congress intended that it be treated as a continuing offense. Because none of the federal embezzlement statutes have explicit language stating that embezzlement is a continuing offense, everything falls on the second prong, which is a matter of interpretation for the courts.
In the decades following Toussie, four federal circuits have accepted appeals debating the application of the second prong of the Toussie test to embezzlement. The Seventh, Eighth, and Second Circuits (in United States v. Yashar, 166 F.3d 873 (7th Cir. 1999); United States v. Askia, 893 F.3d 1110 (8th Cir. 2018); and United States v. Green, 897 F.3d 443 (2d Cir. 2018)) all found that continuing-offense embezzlement cannot stand under the second prong of the Toussie test. Each court gave multiple reasons supporting their position. Two reoccurring points that these courts made was that embezzlement is not as well established as other crimes covered by the continuing offense doctrine and that Congress, when creating the statute, did not specifically consider the application of the doctrine. Another factor behind these opinions was the Supreme Court’s cautionary holding in Toussie, which urged that the doctrine’s use be limited in order to prevent erosion of the statute of limitations.
However, the Fourth Circuit (in United States v. Smith, 373 F.3d 561 (4th Cir. 2004)), took a less strict approach to interpreting the second prong of Toussie. The Fourth Circuit found that Congress surely must have intended the doctrine to apply to the fact patterns of crimes that met the traditional definition of a continuing offense. Although the Supreme Court had advised that the doctrine be limited, they noted that Congress’ purpose in enacting some embezzlement statutes was to broaden prosecutorial authority, and therefore sufficient intent existed. If anything, the Fourth Circuit’s holding highlights the extreme vagueness of the second prong of the Toussie test in determining Congress’ intent. This vagueness indicates a need for reform.
The Supreme Court is correct in its assertion that preserving the statute of limitations is an important consideration, but that assertion should not mean that a balance cannot be struck between the statute and continuing offense doctrine. One solution is for the Supreme Court to grant certiorari and revise the test in Toussie to what it actually is: a one-pronged test with exceptions specified by Congress for a limited number of crimes. This would stop courts from subjectively cherry-picking which crimes are well enough established to be continuing offenses. Another plausible solution is that the Supreme Court could accept certiorari and effectively overrule Toussie, creating a balancing test that would be much more effective at allowing the doctrine to apply to crimes that clearly meet the definition of a continuing offense, so long as there is a lessened risk of erosion of the statute of limitations. If no reforms are made, it is likely that the trend will continue to discourage the use of the continuing offense doctrine in embezzlement cases, which is a policy that ultimately benefits criminals instead of victims.