Defendant was indicted for engaging in a “cherry picking” scheme under which “he execute[d] trades without immediately assigning them to a particular account.” Defendant would purchase securities early in the trading day but would not allocate them to specific accounts until he could determine whether their value had appreciated or depreciated. Those that appreciated were allocated to the broker-dealer’s proprietary account and two other favored accounts; those that depreciated were allocated to various discretionary accounts.
Defendant moved to dismiss the indictment on several grounds, arguing, among other things, that claims arising from certain trades at issue in the indictment were barred by a five-year statute of limitations. In granting partial dismissal, the court held that the required elements of securities fraud were satisfied each time defendant executed an alleged fraudulent trade, and thus the applicable statute of limitations began to run separately when each trade was executed. The fact that defendant repeatedly violated the applicable statute over a period of time pursuant to the same scheme did not transform his conduct into a “continuing offense” such that the limitations period would “not begin to run until ‘the conduct has run its course,’” as would be the case for conspiracy, escape, kidnapping and crimes of possession. (United States v. Motz, 2009 WL 2486132 (E.D.N.Y. Aug. 14, 2009))