The Statute of Limitations– a commonly misunderstood concept

The statue of limitations is one of the most commonly confused or misunderstood legal concepts, especially online. The reasoning is as follows, “If someone is not convicted of a crime in x-number of years, which is the statute of limitations, they will have gotten away with it.” We’re assuming crimes which have limitations, unlike murder, which does not. I have seen many make this argument online, likening the expiration of the statute of limitations to a sort of game of hide and seek, such as Martin Shkreli (13 minutes into the video).

SBF was easy to catch for several reasons:

1. The blockchain, being a public ledger, makes it trivially easy to track money flows even if it cannot be linked to an identity.

2. He had no situational awareness, no criminal savvy, and incriminated himself on many occasions.

3. He was stuck on a tiny island with nowhere to go.

4. The feds likely had access to financial records provided by SBF’s co-conspirators, who cooperated against him, notably his ex-girlfriend Caroline Ellison. This gave the feds enough evidence to indict so soon.

5. It was an open-and-shut case of fraud, unlike more complicated cases.

Being the very public ringleader of FTX, the evidence overwhelming, and nowhere to hide, there was no possibility of the statue of limitations expiring ever being a problem.

Regarding only having four or five years to make an arrest, this makes no sense. That would put law enforcement at a major disadvantage. The criminal could just cover his or her tracks, go into hiding, and then remerge after the limitations have passed.

So how does it work? So, for example, let’s assume a bank employee steals $10,000, which would be a felony. For some reason, it goes unnoticed. If after x-number of years (depending on jurisdiction), the bank employee would be off the hook. Even if the theft was noticed, it would be too late.

Let’s assume the bank notices the missing money, reports it to police, and then an investigation is opened. Investigators review the evidence and agree a crime has been committed, but cannot find a defendant and time is running out. Thus in certain circumstances a grand jury may still issue a sealed indictment if there is reason to believe a crime was committed and the defendant is evading justice.

Because the presumed defendant is unidentified/unnamed, the individual is indicted under the pseudonym of John Doe (also known as an “indictment in absentia”). This gives investigators unlimited time to identify the criminal and make an arrest. As soon as a defendant is identified, the indictment is changed to the defendant’s legal name. This was done during the DB Cooper case, in which a “John Doe” indictment was issued against him in 1976 shortly before the deadline.

If no indictment is made, then time would run out even if the investigation is ongoing, after which the investigation would close. Because it’s sealed, the criminal would have no way of knowing, or unless it’s announced that the investigation closed. For example, in 2020 the FBI announced that the ‘Geezer Bandit’ case was closed because robber can no longer be prosecuted.

Or investigators have reason to believe that the crime is being continued in some way (such as conspiracy) or the defendant is ‘evading justice’ (what this means is vague and debatable, like a lot of legal verbiage/jargon) allowing the statute to be ‘tolled’, which means temporarily stopped from running.

There are some notable non-capital crimes in which arrests have been made and or cases kept open well past the statute of limitations:

1. The DB Cooper air piracy case, which was finally closed in 2016 after 45 years and without the hijacker ever being identified. Most experts agree he plunged to his death, but this didn’t stop the search from continuing for decades. Over the years there have been about a dozen suspects floated, but insufficient probable cause to press charges.

2. James Zhong, who in 2022 pleaded guilty to stealing 50,000 BTC in 2012 from the defunct Silk Road marketplace. Despite his identity presumably being unknown well past the five year mark from when the theft was committed, he was still indicted despite wire fraud having a statue of limitations of five years.

3. Ilya Lichtenstein and Heather Morgan who in 2022 were arrested in connection with laundering the proceeds from the Bitfinex hack, which occurred in 2016. It’s possible that their ongoing attempts at laundering the proceeds tolled the limitations, which is five years for money laundering.

For the vast majority of large cases, a perpetrator(s) is identified well before the statute runs out. In the end, it’s almost never as clear cut as “X number of years deadline to identify a suspect and make an arrest” for non-capital crimes. The federal government has many tools at its disposal or can find wrinkles in the law to bend the rules towards its favor. Law is also always up for interpretation; the role of legal scholars and lawyers is interpreting the law. The only way to know for sure is if it’s announced it’s closed.

Leave a comment

Your email address will not be published. Required fields are marked *