Revisiting the Statute of Limitations for Embezzlement: §641 Is Not a Continuing Offense

Introduction

This commentary discusses the recent decision in United States of America v. Kenneth Pontz, decided by the United States Court of Appeals for the First Circuit on March 14, 2025. The case involved Kenneth Pontz, who was convicted of violating a federal embezzlement statute, 18 U.S.C. § 641, by allegedly misrepresenting his financial situation to secure public benefits. Central to this appeal was the question of whether the crime of § 641 embezzlement qualifies as a "continuing offense" to toll the five-year statute of limitations, and whether certain evidentiary rulings—as they related to the admission of lay opinion testimony under Federal Rule of Evidence 701—were proper.

The dispute arises from a complex factual record involving Pontz’s representation of his housing and income arrangements over an extended period and the manner in which the Social Security Administration (SSA) processed and relied upon those representations. Pontz raised two main challenges on appeal: first, that the district court erred by treating the embezzlement scheme as a continuing offense, thereby unjustifiably charging him for conduct beyond the statutory time limit; and second, that the trial court improperly admitted expert-type testimony without the required qualification under Rule 702, instead treating it as lay opinion under Rule 701.

Summary of the Judgment

The panel of Circuit Judges, writing for the majority, reversed part of the district court’s ruling. While they affirmed the evidentiary rulings regarding the admission of the lay opinion testimony, they concluded that embezzlement under 18 U.S.C. § 641 is not a continuing offense. The court held that, absent explicit statutory direction or legislative intent, treating the offense as “continuing” would be inconsistent with the nature of embezzlement, which is completed when the elements of the offense are met. As a consequence, the government could not charge Pontz for conduct that occurred more than five years before the indictment. The Court vacated the restitution and forfeiture orders and remanded the case to the district court to address the appropriate remedy for the statute-of-limitations error while leaving open the possibility that Pontz’s conviction may stand.

Analysis

Precedents Cited

The Judgment relies heavily on a line of precedent that includes TOUSSIE v. UNITED STATES, UNITED STATES v. TORRES SANTIAGO, and other decisions from the First and sibling circuits. In Toussie, the Supreme Court explained that a crime is considered “completed” when all its elements are met, except in instances where Congress has clearly indicated that the offense is continuing. Although some circuits have previously treated certain embezzlement schemes as forming a continuing offense, the majority here emphasizes that the text and legislative history of § 641 do not support such characterization.

Additionally, the court reviewed decisions such as United States v. Daley and UNITED STATES v. YASHAR, which recognize that while multiple transactions may be aggregated to prove a single scheme, aggregation alone does not transform a discrete crime into one that is continuously accumulating harm. The majority also drew comparisons with cases dealing with classic continuing offenses like kidnapping and conspiracy, noting that the inherent “daily threat of substantive evil” present in those crimes is absent in embezzlement.

Legal Reasoning

The Court’s reasoning rested on a detailed inquiry into both statutory construction and legislative history. Two prongs of the Toussie test were analyzed:

1. Explicit Statutory Language: The court found that § 641 does not include explicit language designating it as a continuing offense. Unlike statutes with clear indicators of a continuing course of conduct, the text of § 641 speaks only to the elements of embezzlement and associated penalties.
2. Nature of the Offense and Congressional Intent: The analysis focused on the “substantive evil” inherent in embezzlement. Embezzlement is completed at the moment a wrongful conversion occurs. Even when multiple transactions take place over time, the harm is episodic rather than continuous. The court examined the legislative and amendment history, noting that Congress intended to enable the aggregation of separate embezzlement transactions for the purpose of meeting the $1,000 threshold for felony charges but did not express an intent to create a “continuing offense.”

In dealing with the evidentiary challenges, the Court explained that the lay opinion testimony under Rule 701 was properly admitted because the witness’s opinions were grounded in everyday observations and routine knowledge, rather than in complex technical analysis requiring expert qualification. Even though Pontz objected that the testimony could have been seen as expert opinion (which would normally require qualification under Rule 702), the court distinguished the testimony as falling within the permissible bounds of lay opinion.

Impact

The decision clarifies two important points with potentially far-reaching implications. First, it limits the ability of prosecutors under § 641 to tolled the applicable statute of limitations by mischaracterizing a series of embezzlement acts as a single continuous offense. Jurisdictions and future cases will now have a clearer basis for arguing that, absent specific indications in the statute, an offense is complete once its elements have been met. This provides stronger protection for defendants against stale claims based on conduct that occurred well outside the statutory time limits.

Second, the reaffirmation that permissible lay opinion under Rule 701 can include testimony based on the witness’s day-to-day experience—and does not automatically require expert qualification—will influence evidentiary rulings in similar fraud or benefits-related cases. By setting forth a clear boundary on the technical versus nontechnical nature of opinion testimony, the decision assists trial courts in maintaining fairness without unduly constraining the presentation of practical, experience-based insights.

Complex Concepts Simplified

Several complex legal concepts were central to this case:

• Continuing Offense: A crime is normally considered “completed” once all its elements are satisfied. A “continuing offense” is one where harm or criminality is deemed to persist over time. The court noted that while some crimes like kidnapping maintain a daily threat to the victim, embezzlement does not continue to produce new harm after the illegal conversion of funds occurs.
• Lay Opinion under Rule 701: Lay witnesses may offer opinions if such views are based on their firsthand perceptions and are formulated in a way that is understandable by the average juror. The distinction from expert testimony (which must meet additional reliability standards under Rule 702) lies in the absence of specialized technical knowledge.
• Statute of Limitations: This provision limits prosecution to offenses committed within a fixed period (five years for noncapital federal offenses). The court’s decision reinforces that once a crime is “complete,” the statutory clock begins ticking, and subsequent mischaracterizations as a continuing offense cannot extend that period.

Conclusion

In summary, the First Circuit’s decision in United States v. Pontz represents an important development in the application of statute-of-limitations principles to embezzlement under § 641. The court emphatically held that despite the possibility of aggregating multiple transactions, embezzlement is not a continuing offense once its elements are satisfied, thus precluding prosecution of conduct occurring outside the permissible five-year window.

Moreover, the Court upheld the admission of evidence under Federal Rule of Evidence 701 by clarifying that lay opinion based on ordinary, everyday knowledge is acceptable even when it touches on matters ordinarily associated with expert testimony. The ruling vacates the restitution and forfeiture orders and remands the case to the district court for further proceedings regarding an appropriate remedy for the statute-of-limitations error, leaving open the determination of whether the conviction itself might still stand.

This decision highlights the necessity of accurately characterizing the nature of criminal offenses and reinforces the statutory protections afforded by limitations periods, ensuring that charges are brought within a reasonable timeframe after the alleged offense.