Think the Government’s Claim Against You Is Time-Barred? Not So Fast!

by Dechert LLP

When a company understands that the United States Government may have a claim against it, the company’s directors and officers are usually very aware of the applicable statute of limitations and the passage of time. When the relevant time period has passed without an action being filed, they may be inclined to indulge in a round of self-congratulation. Unfortunately, such celebration may be premature. Under significant pressure to bring more cases against alleged wrongdoers, the Government is increasingly relying on a 1948 statute, the Wartime Suspensions of Limitations Act (“WSLA”), to revive claims that would otherwise be time-barred.

The WSLA, which was based on the provisions of several World War II-era statutes, mandates in essence that when the country is at war, the statutes of limitation applicable to certain actions brought by the Government involving, among other things, frauds committed against the United States, are suspended until five years after the cessation of hostilities. The law has been amended several times, including a modification to address military engagements without a declaration of war pursuant to the War Powers Resolution. The relevant language of the statute specifies that when the US “is at war or Congress has enacted a specific authorization for the use of the Armed Forces…the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner…or (2) committed in connection with…any real or personal property of the United States, or (3) committed in connection with [a government contract]…related to the…the war or …use of the Armed Forces” shall be suspended until 5 years after the termination of hostilities…”

The WSLA is found in Title 18 of the US Code, dealing with criminal law, but there is nothing in its language expressly limiting its application to criminal prosecutions. Similarly, the name and legislative history of the statute suggest that it was intended to deal with cases in which the conduct at issue involved the ongoing war, but only subsection (3) of the statute is explicitly so limited. There is also the question of when exactly hostilities have been terminated.1 In the 50 years following the law’s enactment the Government made very sparing use of it, and there are not many cases addressing its scope. In recent years, the Government has relied on the WSLA far more frequently and in a wider variety of types of cases, including False Claims Act, FIRREA (Financial Institutions Reform, Recovery and Enforcement Act) and common-law actions. Claims of tax fraud seem tailor-made to fit within the language of the WSLA, and it may be anticipated that the Government will seek to employ it even in securities claims. Most courts and commentators that have addressed the scope of the statute’s applicability have focused on the type of military action that is covered by the statute. But few have explored what types of conduct constitute a “fraud or attempted fraud against the United States.” This broad phrase could encompass many different types of actions, and the Government can be expected to test the breadth of the WSLA’s applicability in future actions.

In an ongoing case, U.S. v. Wells Fargo Bank, N.A.,2 the Government alleged under the False Claims Act, FIRREA and the common law that defendant Wells Fargo Bank, N.A. (“Wells Fargo”) had defrauded the Department of Housing and Urban Development regarding the origination of federally insured home mortgage loans, and failure to disclose the bad loans to the Government. Wells Fargo moved to dismiss the Government’s claims as, among other things, time-barred, and the Government opposed the motion relying, in part, on the WSLA. Wells Fargo argued in reply that the WSLA applied only to criminal cases and that it was not clear whether the statute applied to matters that did not concern wartime contracting. Wells Fargo’s motion to dismiss is pending.

Although the the position asserted by Wells has many good policy and other arguments to support it, a number of courts, including the Fourth Circuit in a very recent decision,3 have ruled that the WSLA applies to civil claims. And while there is some authority, and a very strong policy argument, in favor of limiting the scope of the WSLA to war-related matters, the language of subsection (1) of the WSLA does not clearly limit the statute to such claims. Furthermore, the Supreme Court held in 1953 in a case unrelated to war that the WSLA applies to frauds against the Government “of pecuniary nature or of a nature concerning property.”4

Even if the WSLA applies to civil frauds unrelated to war, could it possibly apply to securities fraud claims? Courts have yet to address whether a violation of securities laws is a fraud “against the United States.” In the typical securities fraud case, the Government is not itself the victim of the fraud. Rather, investors are the victims and the Government merely brings enforcement actions aimed at enjoining the alleged wrongdoers from further violations and punishing them by imprisoning or fining them or causing them to disgorge ill-gotten gains. When viewed in this context, a typical securities fraud does not seem to be a fraud “against the United States.” Moreover, the distinction between the Government as victim and as enforcer is a significant one, as made clear by the Supreme Court in a recent decision, S.E.C. v. Gabelli, in which it rejected an argument by the Securities and Exchange Commission that the limitations period for a securities fraud claim for civil penalties was subject to a discovery rule.5 Thus, applying the WSLA to securities fraud claims seems to be a stretch.

But entities that know of potential claims against them by the Government should be aware that the Government may nonetheless try pushing the envelope in order to test how many different types of claims the courts will let it rescue from time bar by its newly invigorated claim resuscitator, the WSLA.


1 While United States v. Prosperi, 573 F. Supp. 2d 436 (D. Mass. 2008), took a functional approach to this question, holding that the wars in Afghanistan and Iraq had ended when a new government had been recognized or the President had declared “major combat operations” to have ended, this view has not generally been followed, since the statute by its terms requires “a Presidential proclamation, with notice to Congress” or “a concurrent resolution of Congress” to establish “termination of hostilities.” See United States v. Pfluger, 685 F.3d 481 (5th Cir. 2012).

2 12 Civ. 7527 (S.D.N.Y.).

3 U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171, 179-80 (4th Cir. 2013), another False Claims Act case, but one directly concerned with war-related activities. The most novel aspect of this decision was that the WSLA was applied to a case prosecuted not by the Government itself but by a relator.

4 U.S. v. Grainger, 346 U.S. 235, 241 (1953). More recently, in U.S. v. BNP Paribas SA, 884 F. Supp. 2d 589, 605 (S.D. Tex. 2012), the court ruled that the WSLA tolled the statute of limitations on a fraud unrelated to war that was allegedly committed against the Department of Agriculture. However, the complaint was dismissed on other grounds. On the other hand, there is at least one decision suggesting that the WSLA was intended to apply only to war-related frauds. See United States v. Sack, 125 F. Supp. 633, 636 (S.D.N.Y. 1954) (“The purpose of the Suspension Act was to give the Government’s law enforcement officials additional time to discover and punish offenses related to the commercial aspects of the war program.”). For an extended discussion of the breadth of “fraud” covered by the WSLA and whether it must be war-related, see Note, The Wartime Suspension of Limitations Act, the Wartime Enforcement of Fraud Act, and the War on Terror, 85 NOTRE DAME L. REV. 313 (2009).

5 S.E.C. v. Gabelli, 133 S. Ct. 1216, 1217-18 (2013) (“This Court, however, has never applied the discovery rule in this context, where the plaintiff is not a defrauded victim seeking recompense, but is instead the Government bringing an enforcement action for civil penalties.”).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.