United States District Court, D. Minnesota
MacLaughlin and Benjamin Langner, Assistant United States
Attorneys, counsel for the government
P. Gray, Earl Gray Defense, and Paul C. Engh, counsel for Mr.
REPORT AND RECOMMENDATION
KATHERINE MENENDEZ, UNITED STATES MAGISTRATE JUDGE
government has charged Scott Phillip Flynn with conspiracy to
defraud the United States, tax evasion, and filing false tax
returns. Mr. Flynn has moved to dismiss the indictment,
arguing that the substantive charges against him are barred
by the statute of limitations. Mot. to Dismiss, ECF No. 22.
Mr. Flynn also moves to suppress statements he made to law
enforcement agents during a February 23, 2012 search of his
home. Mot. to Suppress, ECF No. 31. For the reasons set forth
below, the Court recommends that both motions be denied.
Motion to Dismiss
Flynn “moves for an Order dismissing the substantive
offenses of this case because the statute of limitations has
lapsed.” Mot. to Dismiss at 1. Ordinarily, the
charges against Mr. Flynn would be subject to a six year
statute of limitations. 26 U.S.C. § 6531. However, the
government argues that the six year deadline was extended by
two years, nine months, and one day due to operation of a
federal statute, 18 U.S.C. § 3292, which allows the
government additional time to bring charges in cases
requiring international investigation if certain conditions
are met. Mr. Flynn's Motion to Dismiss challenges the
legal sufficiency of two ex parte applications filed under
that statute for suspension of the statute of limitations in
18 U.S.C. § 3292
statute of limitations for tax evasion and filing false tax
returns is six years. 26 U.S.C. § 6531. However, 18
U.S.C. § 3292 provides that the statute of limitations
may be suspended for a maximum of three years to allow time
for international investigation if certain conditions are
met. Section 3292 reads in pertinent part:
(a)(1) 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. . . .
(b) Except as provided in subsection (c) of
this section, a period of suspension under this section shall
begin on the date on which the official request is made and
end on the date on which the foreign court or authority takes
final action on the request.
(c) The total of all periods of suspension
under this section with respect to an offense-
(1) shall not exceed three years; and
(2) shall not extend a period within which a
criminal case must be initiated for more than six months if
all foreign authorities take final action before such period
would expire without regard to this section.
(d) As used in this section, the term
“official request” means a letter rogatory, a
request under a treaty or convention, or any other request
for evidence made by a court of the United States or an
authority of the United States having criminal law
enforcement responsibility, to a court or other authority of
a foreign country.
18 U.S.C. § 3292.
Eighth Circuit Court of Appeals has not interpreted §
3292, but courts in other federal appellate courts have.
“A plain reading of § 3292 demonstrates that a
district court's decision to suspend the running of a
statute of limitations is limited to two considerations: 1)
whether an official request was made; and 2) whether that
official request was made for evidence that reasonably
appears to be in the country to which the request was
made.” United States v. Broughton, 689 F.3d
1260, 1273 (11th Cir. 2012). A request for suspension of the
statute of limitations must be accompanied by
“something with evidentiary value-that is, testimony,
documents, proffers, and other submissions bearing some
indicia of reliability-tending to prove that it is reasonably
likely that evidence of the charged offense is in a foreign
country.” United States v. Trainor, 376
F.3d1325, 1332 (11th Cir. 2004); see also DeGeorge v.
U.S. Dist. Ct. for Cent. Dist. of Cal., 219 F.3d 930,
937 (9th Cir. 2000) (“[T]he government has some burden
to establish, as opposed to being able to merely assert
without support, that the foreign evidence it seeks meets the
The § 3292 Applications
case, the government filed two separate applications to
suspend the running of the statute of limitations based upon
investigation in two countries: Australia and Costa Rica.
Both applications were granted by judges in the District of
October 11, 2013, counsel for the government, Assistant
United States Attorney David MacLaughlin, presented an Ex
Parte Application for Suspension of Running of Statute of
Limitations to United States District Judge John R. Tunheim.
Gov't's Ex. B. The 2013 Application was supported by
a declaration of the government's counsel that mirrored
the averments in the ex parte application itself.
See Ex. B at 4-6 (10/11/2013 Decl. of David
MacLaughlin). In the 2013 Application, the government
asserted that a grand jury was impaneled in the District of
Minnesota to conduct an investigation of Mr. Flynn and
several other individuals for possible criminal offenses
including: (1) tax evasion; (2) fraud and false statements;
(3) conspiracy to defraud the United States; (4) wire fraud;
(5) securities fraud; and (6) money laundering. Ex. B at 1-2.
Pursuant to 18 U.S.C. § 3292, the government asserted
that it had made an official request for evidence relating to
the investigation to the Commonwealth of Australia because an
Australian attorney named Steven Miotti had assisted Mr.
Flynn and Michael Carnicle in evading income tax obligations.
Ex. B at 2-3.
particular, the 2013 Application alleged that Mr. Miotti had
helped Mr. Fynn and Mr. Carnicle evade taxes “by
recruiting numerous Australian nominees to hold stock for
[Mr. Flynn and Mr. Carnicle] and to receive the proceeds of
the sale of such stock and then circuitously to route those
proceeds back to [Mr. Flynn and Mr. Carnicle].” Ex. B
at 2. Although an official request for assistance had been
sent to Australia pursuant to the Treaty between the
Government of the United States of America and the Government
of Australia on Mutual Assistance in Criminal Matters, the
Department of Justice had not received a response at the time
the 2013 Application was filed. Ex. B at 5, 7.
on the 2013 Application, Judge Tunheim found that Mr.
MacLaughlin's declaration “summarized the relevant
facts uncovered during the course of the
investigation.” Ex. B at 9. Further, Judge Tunheim
concluded that: “[i]t reasonably appears, based on a
preponderance of evidence presented to the Court, that
evidence of the offenses under investigation is located in
[the] Commonwealth of Australia; [and] [i]t further appears,
based on a preponderance of the evidence presented to the
Court, that the . . . Department of Justice made an official
request [pursuant to § 3292].” Ex. B at 9. Based
on these findings, Judge Tunheim granted the 2013 Application
and ordered “that the running of the statute of
limitations for the offenses set forth in the [2013
Application] [was] [t]hereby SUSPENDED for the period
authorized by 18 U.S.C. § 3292(c).” Ex. B at 9.
government filed another Ex Parte Application for Suspension
of Running of Statute of Limitations on February 26, 2015.
Gov't's Ex. C. In the 2015 Application, which was
again supported by a declaration from Mr. MacLaughlin, the
government explained that the grand jury was investigating
Mr. Miotti, Mr. Flynn, Arnaldo Bonilla Quesada, and a number
of entities associated with them, for the same list of
offenses in the 2013 Application, including a “tax
scheme.” Ex. C at 1. The government explained that the
grand jury's investigation “to date has revealed
that Miotti, an Australian attorney, has assisted Scott Flynn
in evading his United States income tax obligations by
recruiting numerous Australian nominees to hold stock for
Flynn and to receive the proceeds of the sale of such stock
and then circuitously route those proceeds back to
Flynn.” Ex. C at 3. Further, the 2015 Application
explains that “[s]ubstantially all of the proceeds were
routed from Australia to Arnaldo Bonilla Quesada in Costa
Rica, who then transferred the proceeds to Flynn.” Ex.
C at 3.
government also stated that the grand jury was investigating
Mr. Flynn and Mr. Quesada for potentially defrauding victims
of the United States and Europe out of approximately $12
million by inducing them to purchase property in Costa Rica
through material misrepresentations. Ex. C at 2.
Specifically, Flynn and Quesada represented that, for prices
that began at $90, 000, the victims could obtain unencumbered
title to lots in Costa Rica equipped with infrastructure
(road, water and electricity connections) suitable for
building dwellings. However, none of the victims received
deeds or title to the lots, and it appears that the
infrastructure was never built.
Ex. C at 2.
2015 Application stated that it reasonably appeared evidence
of the alleged tax scheme and the fraudulent investment
scheme would be found in Costa Rica. Ex. C at 3. The
Department of Justice made an official request to Costa Rica
pursuant to the Inter-American Convention on Mutual
Assistance in Criminal Matters, Ex. C at 3-4, but Costa Rica
had not yet responded, id. at 7. Based on the 2015
Application, United States District Judge Patrick J. Schiltz
found that: (1) Mr. MacLaughlin's declaration
“summarizes the relevant facts uncovered during the
course of the investigation”; (2) a preponderance of
the evidence presented to the Court reasonably showed that
evidence of the offenses under investigation was located in
Costa Rica; and (3) a preponderance of the evidence presented
showed that the Department of Justice made ...