The Wartime Suspension of Limitations Act, the Wartime Enforcement of Fraud Act, and the War on Terror

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INTRODUCTION

In 1945, while the world was sifting through the rubble of World War II, Harold Lurie and Samuel Dworett were attempting to fraudulently profit from the remnants of the American war machine. In order to redistribute what was estimated at the time to be $75 billion in surplus stock, (1) veterans were granted a priority right to buy property, machinery, and other surplus items. (2) In fact, by the distribution's end, former soldiers purchased over $500 million worth of the remaining tools and materials--twenty-two percent of the entire war surplus. (3)

Lurie and Dworett, hoping to exploit this priority access to the goods, attempted to fraudulently obtain veterans' preferences for themselves and for their business, Rel Sales Company, Inc. (4) They "advised and caused" honorably discharged veterans to apply for materials on the company's behalf, including counseling the veterans to falsify statements on their applications. (5) The two were eventually indicted in 1952, but Lurie and Dworett filed motions to dismiss on the grounds that the charges were barred by the three-year statute of limitations on fraud. (6)

Despite the apparent staleness of the indictments, the government was able to prevail on the prosecution by utilizing the Wartime Suspension of Limitations Act (7) (WSLA). The Act, seemingly drafted for this very situation, suspended the commencement of the statute of limitations on fraud until three years after the termination of hostilities. (8) Accepting the government's application of WSLA, the U.S. Court of Appeals for the Seventh Circuit affirmed Lurie and Dworett's convictions. (9)

After a flurry of like prosecutions in the aftermath of World War II, WSLA was not successfully invoked again for over fifty years. (10) But in May 2006, the government successfully relied on the now "obscure" (11) WSLA to prosecute construction contractors who were charged with multiple counts of fraud while the United States was involved in the conflicts in Afghanistan and Iraq. (12) District Judge Richard Stearns accepted the government's application of the Act, allowing prosecutors to extend the statute of limitations and pursue charges of fraud related to Boston's Central Artery/Tunnel Project, known in Massachusetts as the "Big Dig." (13)

Awakening this essentially dormant Act not only has significant implications for both corporate and individual actors, but it also presents new challenges for judicial interpretation and reestablishes an important tool for federal prosecutors. The application of this twentieth century statute to a twenty-first century conflict, however, also raises a host of concerns, including the constitutional tension that arises when the judiciary must decide when the nation is at war, particularly in a threat environment where armed conflict is drastically different than the 1940s-conception of war. Judge Stearns's application of this statute to non-war-related fraud also reopens an old jurisprudential inconsistency: exactly how broadly did Congress envision the types of "fraud" that should be affected by WSLA? Further, it requires a consideration of the purpose of the statute itself, and whether this purpose can still provide interpretational guidance or a rationale for the Act.

As it turns out, Senators Leahy and Grassley had already considered some of the problems inherent in WSLA and its application to the conflicts in Iraq and Afghanistan. (14) Nearly five months before Judge Stearns issued his Big Dig decision, the Senators introduced the Wartime Enforcement of Fraud Act (15) (WEFA) in an attempt to modernize WSLA. Added as an amendment to the national defense bill, the legislation made its way through both Houses, passing the Senate in September 2008, and was signed into law on October 14, 2008. (16) The Senators' amendment makes significant improvements to the original WSLA, but unfortunately does not adequately address some of its key shortcomings. …