United States v. Knipp United States Court of Appeals for the Sixth Circuit, 1992 963 F.2d 839 MILBURN, Circuit Judge. Defendants Barry L. Knipp and Vernon L. Hamilton appeal their jury convictions on one count of conspiracy (a) to defraud a feder- ally insured financial institution and (b) to misapply the monies, funds, cred- its and securities of a federally insured financial institution in violation of 18 U.S.C. $371, and six related counts of aiding and abetting each other in devis ing a scheme to defraud federally insured financial institutions in violation of 18 U.S.C. 52 and $1344. On appeal, the issue "" [is] whether Congress' extension of the statute of limitations from five years to ten years violates the Ex Post Facto Clause of the United States Constitution ". For the reasons that follow, we affirm. " Defendant Barry L. Knipp was president of the People's Bank of Olive Hill, Kentucky ("PBOH"), and his co-defendant, Vernon L. Hamilton, was president of Hamilton Hardwood Lumber Company, Inc. ("HHLC"), a lumber business in Carter County, Kentucky. HHLC maintained a checking account at PBOH. Hamilton also maintained a checking account in the name of Hamilton Farms at the First National Bank of Grayson, Kentucky ("FNBG"). Both banks were insured by the FDIC. In 1983 and early 1984, HHLC borrowed $1,200,000 from PBOH and also established a $750,000 ready reserve account that functioned as a demand loan to cover overdrafts up to $750,000. Defendant Knipp was the bank's account officer for all these loans. By November 1984, the ready reserve account established for HHLC had reached its $750,000 limit, but Hamilton continued to write checks on the a tus. By March 1985, the HHLC account had been over drafted to the extent of $552,153.06. Because PBOH was at its legal lending limits with HHLC, and in order to disguise the overdraft status of the account, a check kiting system was set up by defendant Hamilton to cycle checks between the HHLC account at PBOH and the Hamilton Farms account at FNBG. According to various employees of PBOH, the kite was operated by the daily transfer ecks, drawn on uncollected funds, between On instructions from defendant Knipp, employees of PBOH kept a daily watch on HHLC's checking account for overdrafts beyond the $750,000 ready reserve fund. When an overdraft check was presented, payment of it was delayed while a telephone call was placed to defendant Hamilton to advise him of the amount of the deposit he would be required to make to cover the overdraft. Hamilton e Distinction Between Criminal Law and Criminal Procedure 65 would then deposit at PBOH one or more checks drawn on the Hamilton Farms account at FNBG. As the amount of the overdrafts spiraled upward, Hamilton was required to come to PBOH daily and deposit checks drawn on the Hamilton Farms account at FNBG to cover HHLC's overdrafts. He kept the Hamilton Farms account stocked with checks written on the HHLC ac count at PBOH. .. Matters began coming to a head in February 1985 when FNBG installed new computer system that could track floats on items being deposited in that bank. The Hamilton Farms account immed appeared on that new report with a large uncollected balance in excess of $200,000 ng the punt, FNBG's controller determined that 3, 4, or 5 checks, all for different amounts, and totaling tween $230,000 and $250,000, were being written and deposited back and forth be Hamilton Farms account at FNBG and the HHLC account at PBOH on a daily basis e same umber of checks in the same amounts were being deposited each day. "". Both defendants argue that the district art should have granted their motions to dismiss this case because it was brought in violation of the Ex Post Facto provisions of Article 1. Section 9, of the United States Constitution. The date of the last offense mentioned in the indictment is April 30, 1985, and the statute of limitations in effect on that d tations period established by 18 U.S.C. $2382. On August 9, 1989, befo statute of limitations ran as to this case, Congress enacted 18 U.S.C. $3293, which extended the limitations period applicable to the offense as charged from five years to ten years. Defendants were indicted on July 24, 1990. Therefore, the old five-year statute of limitations had run, but the new ten-year stat not. " Pleading an expired limitations period is certainly a defense in the general sense that it is a defensive measure. More particularly, however, it is a matter in bar of prosecution and as such is distinguishable from a "pure" defense, which defeats one or more of the elements of the crime. This distinction was noted and strongly reinforced by the Court in Youngblood when the Court, after an extended analysis, decided to overrule Kring v. Missouri, 107 U.S. 221 (188 because in Kring it had erred in confusing procedural defenses with defenses to the elements of the crime. Focusing on the meaning of the word "defense" as used in the quotation from Beazell and applying it to Kring, the Court said: But the use of the word "defense" carries a meaning quite different from that which appears in the quoted languag e prohibition on alterations in "the legal definition of the offense" or "the nature or amount of the punishment imposed for its commission." Beazell, 26 U.S., at 169-170. The "defense" available to Kring under earlier Missouri law was not one related to the definition of the crime, but was based on the law reg ulating the effect of guilty pleas. Miss ty pleas. Missouri had not changed any of the he of murder, or the matters which might be pleaded as an excuse or justification for the conduct underlying such a charge; it had changed Its law respecting the effect of a guilty plea to a lesser included offense. Youngblood, 110 S. Ct. at 2723 (emphasis added). 66 Section II Criminal Law and Criminal Procedure Thus, "defense" as used in Beazell means a defense related to the definition or elements of the crime. It does not have the much broader meaning assigned to it by defendants, because a plea in bar is not related to the definition of a crime and is not pleaded as a nullification of one or more of its elements or as an excuse or justification for its commission. Accordingly, defendants' reliance on Youngblood is entirely misplaced. Moreover, the courts of appeals considering this issue have held that the extension of a limitations period before that period has run does not violate the Ex Post Facto Clause. In United States ex rel. Massarella v. Elrod, 682 F.2d 688, 689 (7th Cir. 1982), cert. denied, 460 U.S. 1037, 103 S. Ct. 1426, 75 L. Ed. 2d 787 (1983), the Seventh Circuit held that the extension a period of limitations was procedural only and did not implicate the Ex Post Facto use. ". The Second Circuit in Falter v. United States, 23 F.2d 420, 425 (2d Cir.), cert. denied, 277 U.S. 590 (1928), and the Ninth Circuit in Clements v. United States, 266 F.2d 397, 399 (9th Cir.), cert. denied, 359 U.S. 35 (1959), also con- cluded that extensions of limitations periods do not implicate the Ex Post Facto Clause. Although this circuit has not directly decided this issue, it has stated that "a change in the law which is procedural is not ex post facto even though it may work to the disadvantage of the defendant." United States v. Prickett, 790 F.2d 35, 37 (6th Cir. 1986). The defensive use of a statute of limitations is a procedural defense in the nature of a plea in bar. Because it has nothing to do with the internal structure of the crime or its elements, it is not the kind of "defense" that the Supreme Court was referring to in Beazell when it stated that the Ex Post Facto Clause was violated if a defendant was later deprived of a defe ense that had been avail- able to him at the time he committed the crime in question. Instead, the defen- sive use of a statute of limitations is merely a procedural matter, and it follows that Congress' extension of the statute of limitations in this case did not violate the Ex Post Facto Clause. ".. For the foregoing reasons, the judgment of the district court is AFFIRMED. Case Focus Why is a change to a defense to a criminal prosecution such as the statute of limitations not subject to the ex post facto clauses of the U.S. Constitution? In this case how did the court distinguish a procedural law from a substantive law?