United States v. Crouch ( 1995 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 93-7719
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
A. GUY CROUCH, III and
MICHAEL J. FRYE,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Texas
(April 20, 1995)
Before POLITZ, Chief Judge, GARWOOD and BENAVIDES, Circuit Judges.
POLITZ, Chief Judge:
The district court dismissed indictments against A. Guy
Crouch, III and Michael J. Frye which arose out of alleged illegal
banking activity. For the reasons assigned, we affirm.
Background
In March of 1986, while examining the records of Delta Savings
Association of Texas, a failed institution, federal investigators
discovered that the institution had been engaged in a "cash for
trash" scheme.1 Delta officials violated federal regulations which
prohibited excessive loans to one borrower by using bogus nominee
borrowers who bore no personal liability for the loans contracted.
Criminal referrals issued for Carl Gerjes, Delta's president,
Robert Ferguson, an involved real estate investor, Crouch, Delta's
attorney and chairman of its board of directors, and Frye who
allegedly acted through a corporate alter ego, JMG Financial, as a
nominee borrower for Ferguson. In 1986 the government began an
investigation into Delta's activities, focusing on Gerjes and
Ferguson, leading to the conviction of Gerjes in 1989 and his
guilty plea conviction on separate but related offenses in 1992, as
well as Ferguson's conviction in 1992. On November 12, 1992 a
19-count indictment was handed up against Crouch and Frye, charging
misapplication of funds, 18 U.S.C. §§ 2, 657; false entries,
18 U.S.C. §§ 2, 1006; false statements, 18 U.S.C. §§ 2, 1014; and
bank fraud, 18 U.S.C. §§ 2, 1344.
Citing the eight-plus years between the alleged crimes in
1984-85 and the indictment, Crouch and Frye asserted prejudice from
the pre-indictment delay and moved for dismissal. A magistrate
judge recommended dismissal because of both presumptive and actual
prejudice caused by the passage of time. Following a de novo
review the district court adopted the recommendation, holding that
1
Delta made loans to real estate investors conditioned on
their purchase of property acquired by Delta primarily through
prior defaults. The "sale" of this property reduced Delta's
liabilities, lowered its required cash reserves, and artificially
increased its net worth, thereby evading closer inquiry into its
operations.
2
defendants had suffered presumptive prejudice because of the delay
and finding actual prejudice resulting from the delay due to the
unavailability of testimony because of death and memory loss and
the disappearance of exculpatory records. Applying the balancing
test directed in United States v. Brand2 and in United States v.
Townley3 for claimed violations of due process resulting from
pre-indictment delay, the court found that the government's
assigned reason for delay, the lack of resources, did not outweigh
the prejudice suffered by Crouch and Frye. The court dismissed the
indictment; the government timely appealed.
Analysis
The government faults the district court's use of the Brand/
Townley balancing test. Even assuming Crouch and Frye were able to
show prejudice, the government contends that their inability to
demonstrate prosecutorial bad faith for the dilatory indictment
defeated their motion for dismissal. It cites post-Townley
decisions for the proposition that to establish a due process
violation based on pre-indictment delay a defendant must show that
the prosecutor intentionally delayed the indictment to gain
tactical advantage.4
2
556 F.2d 1312 (5th Cir. 1977), cert. denied, 434 U.S. 1063
(1978).
3
665 F.2d 579 (5th Cir.), cert. denied, 456 U.S. 1010 (1982).
4
See United States v. Byrd, 31 F.3d 1329 (5th Cir. 1994);
United States v. Neal, 27 F.3d 1035 (5th Cir.), cert. denied, _____
U.S. _____, 115 S. Ct. 1165 (1994); and United States v. Amuny, 767
F.2d 1113 (5th Cir. 1985).
3
In United States v. Marion5 the Supreme Court held that
although the primary protection against undue delay prior to
arrest, indictment, or information is the appropriate statute of
limitations, the due process clause of the fifth amendment offers
some protection from prejudice to a defendant's case arising from
this delay. The Court accepted, as an example, the government's
contention that if it be shown that the government had created the
prejudicial delay as "an intentional device to gain tactical
advantage over the accused,"6 due process would require the
automatic dismissal of the indictment.
Following Marion we began the development of a test for
violations of due process in this context. Despite the Marion
Court's express refusal to "determine when and in what
circumstances actual prejudice resulting from pre-accusation delays
requires the dismissal of the prosecution,"7 in dicta we used the
statement that a showing of prosecutorial bad faith required
automatic dismissal for the very different proposition that such a
showing was a sine qua non for the finding of a due process
violation.8 Because the defendants in those cases were unable to
5
404 U.S. 307 (1971).
6
404 U.S. at 322.
7
Id.
8
See, e.g., United States v. Avalos, 541 F.2d 1100 (5th Cir.
1976), cert. denied, 430 U.S. 970 (1977); United States v. Butts,
524 F.2d 975 (5th Cir. 1975).
Avalos, however, noted a caveat to use of a standard
requiring a showing of prosecutorial bad faith, stating:
4
make a showing of prejudice due to delay, we did not apply this
statement in a dispositive ruling.
The Supreme Court next considered this issue in United States
v. Lovasco,9 stating that proof of prejudice was "a necessary but
not sufficient element of a due process claim, and that the due
process inquiry must consider the reasons for the delay as well as
the prejudice to the accused,"10 including the inquiry whether the
delayed prosecution violates "elementary standards of fair play and
decency"11 and "fundamental conceptions of justice which lie at the
base of our civil and political institutions."12 After balancing
the prejudice caused by an 18-month delay against the government's
reason for delay -- its continuing investigation -- the Lovasco
Court upheld dismissal of the indictment.
The Lovasco Court also noted that following Marion neither it
nor any lower appellate court had "had a sustained opportunity to
consider the constitutional significance of various reasons for
There is no Supreme Court authority squarely holding that
satisfaction of both elements of the test is necessary to
find a due process violation [and] there remains
substantial doubt whether, in a case in which actual
pre-accusation prejudice was overwhelming, the
government's purposeful delay would have to be shown; or,
alternatively, where the government's misconduct was
blatant, whether the defendant would still bear the
burden of showing actual prejudice.
541 F.2d at 1107 n.9.
9
431 U.S. 783 (1977).
10
Id. at 790.
11
Id. at 795.
12
Id. at 790 (citations omitted).
5
delay."13 Instead of passing upon this issue, the Court opted to
leave such rulings to future decisions of the lower courts applying
"the [aforementioned] settled principles of due process."14
In Brand, one of our first cases applying the teaching of
Lovasco, after noting that actual prejudice must be shown as a
threshold matter, we stated that Lovasco did "not indicate that
governmental interests not amounting to an intentional tactical
delay will automatically justify"15 such prejudice. Rather, we
concluded that Lovasco stood for balancing the government's need
for the delay against the actual prejudice suffered by the
defendant.
We next addressed the issue in Townley and crystallized the
test for due process violations thusly:
[T]he accused bears the burden of proving the prejudice
and, if the threshold requirement of actual prejudice is
not met, the inquiry ends there. Once actual prejudice
is shown, it is necessary to engage in a sensitive
balancing of the government's need for an investigative
delay against the prejudice asserted by the defendant.
The inquiry turns on whether the prosecution's actions
violated fundamental conceptions of justice or the
community's sense of fair play and decency. Inherent in
the adoption of a balancing process is the notion that
particular reasons are to be weighed against the
particular prejudice suffered on a case-by-case basis.
. . . [D]ue process . . . turns upon whether the degree
of prejudice thereby sustained by the accused is
sufficiently balanced by the good-faith reasons advanced
by the government.16
13
Id. at 797.
14
Id.
15
556 F.2d at 1317 n.7.
16
665 F.2d at 582 (citations omitted) (emphasis added).
6
The Townley court left no doubt that a showing of bad faith by the
government was not a requisite for a due process violation. We
noted:
[T]he Lovasco balancing test would be reduced to mere
words if indeed the government's 41-month delay in
bringing the indictment were excusable, whatever the
prejudice caused the defendant, simply by a showing that
the government was negligent, however grossly, and not
bad-intentioned.17
Several subsequent decisions overlooked Townley's holding and
relied on the dicta from pre-Lovasco cases for stating that
pre-indictment delay may result in dismissal of an indictment only
when the delay resulted from an ill-intentioned act by the
government.18 In accordance with our long-established rule, we are
bound to follow the earliest dispositive articulation of a rule as
the decision of one "panel may not overrule the decision, right or
wrong, of a prior panel in the absence of en banc reconsideration
or superseding decision of the Supreme Court."19 We therefore must
apply the Brand/Townley balancing test as the binding precedent.
The district court correctly relied upon the holdings of Brand and
Townley in its evaluation of the merits of defendants' motion to
dismiss.
17
Id.
18
United States v. Wehling, 676 F.2d 1053 (5th Cir. 1982). See
also, e.g., Amuny; Byrd; Neal; and United States v. Beszborn, 21
F.3d 62 (5th Cir.), cert. denied, _____ U.S. _____, 115 S. Ct. 330
(1994).
19
Burlington Northern Railroad Co. v. Brotherhood of
Maintenance Way Employees, 961 F.2d 86, 89 (5th Cir. 1992), cert.
denied, _____ U.S. _____, 113 S. Ct. 1028 (1993) (citations
omitted).
7
We find merit in one part of the government's challenge to the
district court's ruling, specifically its holding that the passage
of approximately eight years from the alleged commission of the
crimes to the issuance of the indictment was presumptively
prejudicial. As authority the trial court cited United States v.
Doggett,20 which involved post-indictment delay, as support for the
existence of presumptive prejudice in this pre-indictment delay
case. We find this reliance misplaced as "pre-indictment delay
does not raise a Sixth Amendment issue, but is instead examined
under the due process clause of the Fifth Amendment."21
Our precedents require that the triggering prejudice be
actual, not presumptive. Twenty years ago we stated that
when pre-indictment delay is asserted, actual prejudice
and not merely the real possibility of prejudice inherent
in any extended delay is a necessary element which must
be shown before the restraints of the due process clause
will be applied to bar a prosecution because of a
delay.22
Townley and subsequent decisions23 recognized that the defendant
must show proof of actual prejudice as a threshold requirement.
20
_____ U.S. _____, 112 S. Ct. 2686 (1992).
21
Byrd, 31 F.3d at 1339 (emphasis in original); Marion.
22
United States v. McGough, 510 F.2d 598, 604 (5th Cir. 1975)
(emphasis added) (citations omitted). Accord, Butts at 977 ("The
mere passage of time [does] not constitut[e] the type of actual
prejudice necessary to set aside an indictment returned within the
appropriate statute of limitations. . . ."); United States v. West,
568 F.2d 365, 367 (5th Cir.), cert. denied, 436 U.S. 958 (1978)
("[I]t is readily inferable from the decisions of this court that
the defendants generally bear the burden of establishing actual
prejudice.").
23
Byrd; Neal; Beszborn; Amuny.
8
The district court's conclusion that there was presumptive
prejudice from the mere passage of time was incorrect.
The court a`` quo also based its decision, however, upon its
finding of actual prejudice, focusing upon Crouch's loss of
testimony due to the deaths of several potential witnesses, and
upon Frye's claim that critical and exculpatory documentary
evidence was missing. The government challenges this finding,
contending that the defendants' claim of prejudice consists only of
vague assertions of lost witnesses, faded memories, or misplaced
documents.
Findings of actual prejudice are reviewed under the clear
error standard.24 We find no such error present. The record
supports the finding of prejudice due to the above factors,
reflecting that Crouch established exactly which witnesses were
lost and how the lost witnesses were crucial to rebut the
credibility and character of Gerjes and Ferguson, potentially the
government's star witnesses.25 These potential witnesses included
his father, A. Guy Crouch, Jr., who, as a former board president
and major stockholder of Delta, would have testified in support of
Crouch's claim that Gerjes had misled the board and other Delta
officers about his unauthorized operations. Other corroborating
witnesses included Tranquillo Gubert, another director, and Larry
Tscherner, former vice president of an entity involved in the
24
Beszborn, 21 F.3d at 66.
25
Further, the record indicates that because of Crouch's
cooperation against Gerjes, there is the likelihood of the latter's
animosity.
9
scheme, who would have testified about their dealings with Gerjes
and Ferguson. As Gerjes and Ferguson likely would be cooperating
with the government in its prosecution of Crouch and Frye, the lost
testimony would also be crucial for rebuttal and impeachment
purposes.
The record also contains references to lost exculpatory
documentary evidence, including a lost "Profit Participation
Agreement" between Frye and Ferguson's corporations that allegedly
would have shown Frye's intent to work with Ferguson in developing
the land purchased, rebutting claims that Frye was not materially
involved with the loan and land purchase. Further, the
authenticity of a copy of a document constituting evidence of an
overt act of the conspiracy poses a material issue. The government
claims that Frye forged signatures to a waiver of notice form that
allegedly facilitated his purchase of the "trash" real estate. The
record establishes that only an original copy can be examined for
authenticity and, as the original cannot be found, there is now no
method by which Frye can show that the signatures on the waiver
were authentic. The record also reflects that both Frye and Crouch
had lost, either through routine disposal or surrender to
authorities,26 personal records that could have assisted in
rebutting proof of their guilt. Some of these lost documents were
irreplaceable; this fact, when combined with both expert evidence
validating the defendants' claim of memory loss and the
26
Crouch bases his failure to retain records in part upon his
receipt, on at least three separate occasions, of assurances from
the government that he was not a target of any investigation.
10
aforementioned lost exculpatory testimony, amply supports the
court's finding that Crouch and Frye suffered significant actual
prejudice.
Consistent with Townley's holding, after finding actual
prejudice from pre-indictment delay, the court must weigh the
actual prejudice suffered against the reasons for the delay. The
record reflects that the government had knowledge of Crouch's and
Frye's involvement dating, at the very latest, from its August 1986
receipt of the criminal referrals, but did not initiate an
investigation until, at the very earliest, May of 1991. The
reasons for the long delay in launching the investigation were,
essentially, lack of manpower and the low priority which this
investigation was assigned. Although "prosecutorial overload and
insufficient personnel[] might be entitled to slight weight in the
balance of due process considerations,"27 this slight weight is
insufficient to outweigh the actual prejudice to Crouch and Frye
caused by the lengthy pre-indictment delay.28 Under the
circumstances presented by this particular case, we conclude that
requiring Crouch and Frye to stand trial now would be fundamentally
unfair and violative of due process.
The judgment of the district court dismissing the indictment
is AFFIRMED.
27
665 F.2d at 586.
28
Although the actual delay was longer (by about 18 months),
the period of the investigation is not considered. See Lovasco,
supra.
11
GARWOOD, Circuit Judge, dissenting:
I respectfully dissent.
My first concern is that the majority departs from the
overwhelming weight of precedent in this Circuit by holding that,
where limitations have not run, a defendant may nevertheless
prevail on a due process claim of pre-indictment delay even though
the government did not intentionally delay the indictment to gain
tactical advantage or for other impermissible purpose, and the
delay arose only because of the lack of manpower and the low
priority assigned the investigation. A less than exhaustive review
of this Court's published opinions since United States v. Lovasco,
97 S. Ct. 2044 (1977), reflects that at least twenty-nine different
judges of this CourtSQtwenty-five of the thirty-two individuals who
have ever served as an active or senior judge of this Court since
it split October 1, 1981SQhave authored, or joined without
reservation, unanimous opinions in some eighteen different cases
holding or stating in substance that "[t]o prove that pre-
indictment delay violated his due process rights, a defendant must
demonstrate that the prosecutor intentionally delayed the
indictment to gain a tactical advantage and that the defendant
incurred substantial prejudice as a result of the delay." United
States v. Byrd, 31 F.3d 1329, 1339 (5th Cir. 1994).29
29
Other post-Lovasco published opinions of this Court so
holding or stating include: United States v. Neal, 27 F.3d 1035,
1041 (5th Cir.), cert. denied, 115 S. Ct. 1165 (1994); United States
v. Beszborn, 21 F.3d 62, 65-66 (5th Cir.), cert. denied, 115 S. Ct.
330 (1994); United States v. Hooten, 933 F.2d 293, 296 (5th Cir.
Citing our acknowledged rule that "one panel may not overrule
the decision, right or wrong, of a prior panel in the absence of en
banc reconsideration or superseding decision of the Supreme
Court,"30 the majority justifies its departure from the foregoing
mass of Fifth Circuit precedent by reliance on United States v.
Brand, 556 F.2d 1312 (5th Cir. 1977), cert. denied, 98 S. Ct. 1237
(1978), and United States v. Townley, 665 F.2d 579 (5th Cir.),
cert. denied, 102 S. Ct. 2305 (1982). Laying aside the thought that
we may have had the functional equivalent of en banc establishment
of the rule most recently stated and applied in Byrd, it is in any
event clear to me that Brand and Townley cannot bear the weight
assigned them.
As to Brand, its statements that intentional delay for
tactical advantage need not be shown and that instead the reasons
for the delay should be balanced against the resulting prejudice,
1991); Dickerson v. Guste, 932 F.2d 1142, 1144 (5th Cir.), cert.
denied, 112 S. Ct. 214 (1991); United States v. Delario, 912 F.2d
766, 769 (5th Cir. 1990); United States v. Varca, 896 F.2d 900, 904
(5th Cir.), cert. denied, 111 S. Ct. 209 (1990); United States v.
Carlock, 806 F.2d 535, 549 (5th Cir. 1986), cert. denied, 107 S. Ct.
1161 (1987); United States v. Johnson, 802 F.2d 833, 835, 836 (5th
Cir. 1986); United States v. Scott, 795 F.2d 1245, 1249 (5th Cir.
1986); United States v. Ballard, 779 F.2d 287, 293 (5th Cir.),
cert. denied, 106 S. Ct. 1518 (1986); United States v. Amuny, 767
F.2d 1113, 1119-1120 (5th Cir. 1985); United States v. Wheling, 676
F.2d 1053, 1059 (5th Cir. 1982); United States v. Hendricks, 661
F.2d 38, 39-40 (5th Cir. 1981); United States v. Nixon, 634 F.2d
306, 310 (5th Cir. 1981); United States v. Durnin, 632 F.2d 1297,
1299-1300 (5th Cir. 1980); United States v. Ramos, 586 F.2d 1078,
1079 (5th Cir. 1978); United States v. Willis, 583 F.2d 203, 207
(5th Cir. 1978).
30
Burlington Northern Railroad Co. v. Brotherhood of
Maintenance Way Employees, 961 F.2d 86, 89 (5th Cir. 1992), cert.
denied, 113 S. Ct. 1028 (1993) (citations omitted).
13
556 F.2d at 1317 n.7, are plainly dicta.31 Brand rejected the
defendant's pre-indictment delay claim because he had not
demonstrated any prejudiceSQan admitted requirement for relief
irrespective of the reasons for the delay. Id. at 1316-1317. At
the end of the prejudice discussion in the textSQwhich never even
adverts to whether a further showing beyond prejudice is
requiredSQfootnote 7 is called for. It is only in this footnote
that the language relied on by the majority appears. However, by
this stage the Brand court had already determined to deny relief
because of the absence of prejudice. Moreover, nothing in footnote
7 of BrandSQor in its textSQidentifies the reason for the delay or
purports to characterize the reason as either being or not being
intentional for tactical advantage, or negligent, or otherwise
improper or insufficient. Nor does anything in BrandSQin its text
or its footnotesSQpurport to balance the reason for the delay
against the prejudice to the defendant (which, of course, it could
not, as it had already concluded there was no prejudice). Brand
did not apply a balancing test, and the affirmance in Brand cannot
be said to rest, even alternatively, on its general statement in
footnote 7 that a defendant need not show intentional tactical
delay by the prosecution. Thus, Brand's footnote 7 forms no part
of its ratio decidendi, and is purely dicta.
31
As the majority inferentially recognizes, dicta by one
panel does not bind a subsequent panel. See Matter of Dyke, 943
F.2d 1435, 1445 & n.28 (5th Cir. 1991); Nicor Supply Ships
Associates v. General Motors, 876 F.2d 501, 506 (5th Cir. 1989).
As a practical matter, such a principle is necessary to the
effective functioning of a large multi-panel court such as the
Fifth Circuit.
14
TownleySQa quorum decision by two judgesSQmay well be a holding
rather than simply dicta. In Townley we concluded that there was
no evidence that the delay was due to "bad faith motive to
prejudice" the defendant. 665 F.2d at 581. Under the rationale of
Byrd and its predecessors, that alone would have justified
affirmance, even though we concluded that "the lengthy pre-
indictment delay somewhat prejudiced Townley." Id. at 586.
However, we proceeded to actually balance the extent of the
prejudice against the reasons for the delay, stating that such a
balancing could show a due process violation from pre-indictment
delay even though there was no "intentional tactical delay or
harassment on the part of the government." Id. at 582. We
ultimately concluded that the way the trial actually unfolded, and
particularly the way the government sought to prove its case, was
such that the prejudice to Townley was not sufficiently
substantial, when balanced against the reasons for the delay ("the
press of other investigations . . . low-priority accorded to the
present investigations and . . . changes of governmental
prosecuting personnel," id. at 581), as to amount to a denial of
due process.32
Assuming, then, that Townley is holding, not dicta, it is
nevertheless not binding because it conflicts with our earlier
holding in United States v. Durnin, 632 F.2d 1297 (5th Cir. 1980).
In Durnin, we rejected a due process claim of pre-indictment delay
32
As discussed in the text below, it is also significant
that in Townley we reviewed (and affirmed) a conviction following
trial, while here we review a pre-trial dismissal.
15
on the sole basis that the defendant had not shown a motive on the
part of the prosecutor to use the delay for tactical advantage, and
we did so without even evaluating the presence or extent of
prejudice:
"Appellant alleges that the delay denied him due process
because he lost the testimony of an important witness in
the interim between when the government could have
brought an indictment and when it finally chose to do so.
However, to establish a violation of the Due Process
Clause in this context, appellant must show, not only
substantial prejudice flowing from an inordinate delay,
but also a motive on the part of the prosecutor to use
the delay to gain a tactical advantage. . . . [citations]
Appellant does not contend that the government sought to
delay his indictment for tactical advantage, and the
district court specifically found that the delay resulted
from the government's good-faith attempt to ascertain
appellant's guilt beyond a reasonable doubt. Since this
finding is abundantly supported by the record, the
district court's ruling on the motion to dismiss must be
affirmed." Id. at 1299-1300 (citations and footnote
omitted; emphasis added).
There is no reasonable basis upon which Townley can be
characterized as holding while at the same time treating Durnin as
dicta. Durnin is thus the controlling precedent. The overwhelming
weight of authority in this Circuit is to the same effect. See
note 1, supra, and accompanying text. Accordingly, I am unable to
agree to the majority's application of a contrary rule.33
33
I note in passing that the Fifth Circuit does not stand
alone in its holdings that to sustain a due process claim of pre-
indictment delay the defendant must show "not only substantial
prejudice . . . but also a motive on the part of the prosecutor to
use the delay to gain a tactical advantage." Durnin at 1299. In
United States v. Sowa, 34 F.3d 447, 450 (7th Cir. 1994), the
Seventh Circuit stated,
"To establish that a pre-indictment delay violated due
process, [defendant] Sowa must prove that the delay
caused actual and substantial prejudice to his fair trial
rights, and there must be a showing that the government
16
My second concern is that here the entire indictment as to
Crouch and Frye has been dismissed prior to trial. It seems to me
that only the very clearest showing of virtually certain
substantial actual trial prejudice should justify such a pretrial
dismissal. In my view, this high standard of proof has not been
met here.
I begin by noting that the right here asserted is the right to
avoid an unfair conviction, not the right to be free of a trial
which will likely be unfair. In United States v. MacDonald, 98
S. Ct. 1547, 1553 (1978), the Supreme Court held that "[u]nlike the
protection afforded by the Double Jeopardy Clause, the Speedy Trial
Clause does not . . . encompass a 'right not to be tried' which
must be upheld prior to trial if it is to be enjoyed at all." The
same conclusion applies, a fortiori, to due process claims of pre-
delayed indictment to gain a tactical advantage or some
other impermissible reason . . . . Sowa's claim . . .
fails to meet the requirements of the second prong. . .
. [D]ue process is only implicated if the government
purposely delayed the indictment to take advantage,
tactically, of the prejudice or otherwise acted in bad
faith."
The Second Circuit stated the same rule in United States v. Hoo,
825 F.2d 667, 671 (2d Cir. 1987), cert. denied, 108 S. Ct. 742
(1988). In his dissent from the denial of certiorari in Hoo,
Justice White observed that the First, Third, Tenth, and Eleventh
Circuits, in addition to the Second, "have similarly required a
showing of prosecutorial misconduct designed to obtain a tactical
advantage over the defendant or to advance some other impermissible
purpose in order to establish a due process violation." Hoo v.
United States, 108 S. Ct. 742 (1988) (White, J., dissenting from
denial of certiorari). Justice White identified the Fourth and
Ninth Circuits as applying a balancing test. Id.
17
indictment delay.34 The Supreme Court further stated in MacDonald:
"Before trial, of course, an estimate of the degree
to which delay has impaired an adequate defense tends to
be speculative. . . . The essence of a defendant's Sixth
Amendment claim in the usual case is that the passage of
time has frustrated his ability to establish his
innocence of the crime charged. Normally, it is only
after trial that that claim may fairly be assessed." Id.
at 1552 (emphasis added).
Again, this fully applies to claims of pre-indictment delay. The
denial of relief before trial in no way precludes the accused, if
convicted, from successfully demonstrating that the undue and
improper pre-indictment delay substantially and unfairly prejudiced
his ability to avoid that result. Thus in United States v. Marion,
92 S. Ct. 455, 466 (1971), the Supreme Court reversed the pretrial
dismissal for pre-indictment delay, but observed that "[e]vents of
the trial may demonstrate actual prejudice, but at the present time
appellees' due process claims are speculative and premature." See
also McDonald, 98 S. Ct. at 1552 ("The denial of a pretrial motion
to dismiss an indictment on speedy trial grounds does not indicate
that a like motion made after trialSQwhen prejudice can better be
gaugedSQwould also be denied.").
These realities, it seems to me, dictate the conclusion that
a far stronger showing should be required to sustain a claim of due
process pre-indictment delay prior to trial than would be required
34
Even statutes of limitation have been held not to create
a right not to be tried. See United States v. Weiss, 7 F.3d 1088
(2d Cir. 1993). Although pre-trial dismissals on limitations
grounds are not uncommon, that is because the date of the offense
appears on the face of the indictment and the question is a purely
legal one; the reasons for the delay in indictment and whether it
is prejudicial are generally irrelevant to the limitations issue.
18
after trial and conviction. I believe that experience bears this
out. So far as I am aware, there is only one reported federal
appellate decision sustaining such a pretrial dismissal, a 1976
decision by a divided panel of the Eighth Circuit. United States
v. Barket, 530 F.2d 189 (8th Cir. 1976). There are no such
decisions since Lovasco.35 This silence speaks volumes.
Townley provides a compelling example of how a strong pretrial
showing of substantial prejudice may ultimately dissolve in the
context of the actual trial itself. There, the defendant Townley
and his partner Owens were charged with mail fraud in connection
with inducing persons to purchase and invest in nonexistent vending
machines. Townley, 665 F.2d at 582. Townley claimed that due to
pre-indictment delay he was unable to show that he really believed
the machines would be produced and would be a valuable investment
for the purchasers. We concluded that the requisite substantial
prejudice would have been shown "had the thrust of the government's
case" as presented at trial "been that Townley well knew that he
and Owens could not deliver the machine sold or that the scheme
could not be successful." Id. at 583. We found no such
substantial prejudice, however, because "the main thrust of the
government's case," as presented at trial, "concerned [particular]
misrepresentations made by Townley in the sale of the machines."
35
Shortly after Barket, another divided panel of the Eighth
Circuit again sustained the pretrial dismissal of three counts of
a four-count indictment on a due process, pre-indictment delay
basis. United States v. Lovasco, 532 F.2d 59 (8th Cir. 1976).
However, the Supreme Court reversed. United States v. Lovasco, 97
S. Ct. 2044 (1977).
19
Id. Townley also claimed prejudice from being unable to adequately
corroborate his testimony that, as soon as he discovered Owens'
fraud, he took action to protect the investors. We rejected this
based on the approach taken by the government at trial:
"Insofar as counsel was unable to corroborate
Townley's testimony that (after he had discovered Owens'
fraud) he had informed the financing company not to
approve any further applications for credit by investor-
purchasers, the government expressly stated it would not
dispute Townley's testimony, and neither by argument nor
evidence did it attempt to cast doubt upon this
creditable act by Townley or upon his two customer-
witnesses whose testimony tended to corroborate him. The
government further made full disclosure of its files to
Townley's attorney to aid him in the preparation of the
defense." Id. at 585-86 (citation omitted).36
Another instructive decision of ours in this respect is United
States v. McGough, 510 F.2d 598 (5th Cir. 1975). There, we
reversed a pretrial dismissal order based on a due process claim of
pre-indictment delay. We described the claim as follows:
"McGough's assertion of actual prejudice to his defense
is based primarily upon the death of some six potential
defense witnesses. Some of these witnesses, McGough claimed,
would have testified as to firsthand knowledge of several of
the transactions which entered into the government's
calculation of the amount understated; the testimony of others
might impeach government witnesses. . . . [T]he government
asserted at the hearings that it had expected two of them to
be government witnesses, rather than witnesses for the
defense." Id. at 604.
Although we observed that we could "find no indication that the
trial court weighed the contradictory factual assertions before
stating that there was actual prejudice," id. at 604, we
nevertheless did not remand for further findings in that respect,
36
We even observed that the government did not use but "had
available" a witness "who would have cast doubt on Townley's
exculpatory testimony." Id. at 586.
20
but rather ordered that "the case is remanded for a prompt trial."
Id. at 605. In this respect we quoted Marion, 92 S. Ct. at 466:
"'Events of trial may demonstrate actual prejudice, but at the
present time appellees' due process claims are speculative and
premature.'" Id. at 604-5. So it is here. See also, e.g.,
Robinson v. Whitley, 2 F.3d 562, 571 (5th Cir. 1993), cert. denied,
114 S. Ct. 1197 (1994);37 United States v. Rice, 550 F.2d 1364, 1369
(5th Cir.), cert. denied, 114 S. Ct. 1197 (1994).38
Evaluation of a due process claim of pre-indictment delay
after trial not only benefits from sure knowledge of how (to say
nothing of whether) the government proved its case, but also from
knowledge of what the defense is able to produce. It is settled
that, to sustain a claim of substantial prejudice based on lost
evidence or witnesses, the defendant must show that "the
information . . . could not otherwise be obtained from other
sources." United States v. Beszborn, 21 F.3d 62, 67 (5th Cir.),
cert. denied, 115 S. Ct. 330 (1994) (reversing pretrial dismissal
based on due process claim of pre-indictment delay). See also
37
In Robinson, the habeas petitioner claimed that the post-
indictment delay prejudiced him because he lost two witnesses, one
having died and the other no longer locatable, who "would have
corroborated the 'alibi' he presented at trial." We rejected this
claim, stating, "By the trial's end, however, the prosecution had
managed to blow so many holes in Robinson's alibi that the only
effect their testimony would have had would be to have transformed
Robinson's alibi from an incredibly tall tale to just a tall one."
Robinson, 2 F.3d at 571.
38
In Rice, in rejecting a pre-indictment delay claim, we
observed, concerning the defendant's claim (pretrial) that the
delay had allowed the government to procure evidence against him,
that at trial "[n]o such later acquired evidence was ever offered
against any of the defendants." Rice, 550 F.2d at 1369.
21
United States v. Royals, 777 F.2d 1089, 1090 (5th Cir. 1985)
("[D]efendant has failed to show that such evidence could not have
otherwise been obtained."). Where the due process claim of pre-
indictment delay is ruled on pretrial, the defense, which
frequently will be in a much better position to know of or unearth
such "replacement" defensive evidence, has every incentive not to
diligently look for or come forward with it. At trial, however,
the incentive is precisely the opposite. Then, if the evidence is
not produced, we can have much more confidence that it could not
have been.
There is no way to know that this case will not be a Townley.
At this stage, any claim that Crouch and Frye will be convicted
because of substantial prejudice from pre-indictment delay is
purely speculative. For example, Crouch claims that the delay
deprived him of the testimony of his father, who died in June 1992,
the indictment having been returned in November 1992, and of
Tranquillo Gubert, who died in September 1988, both former
directors of Delta Savings Association. But Crouch does not claim
that either of these individuals knew anything of the charged
transactions, only that they would have testified that Gerjes,
Delta's president, was in charge of Delta and often misled the
board and Crouch. Such testimony is of only attenuated relevance
to the charged transactions, and there is no showing that other
board members were not available to supply this evidence.39 As to
39
Furthermore, a defendant claiming pre-indictment delay
must show that any claimed prejudice is attributable to that
portion of the delay that is undue. Cf. Walter v. Scott, 21 F.3d
22
Larry Tschearner, an officer of another involved entity, who died
at an unspecified time before the return of the indictment, the
claim that he could have impeached expected government witnesses
Gerjes and Ferguson is plainly a speculative basis on which to find
prejudice pretrial.
Frye's claim respecting the lost "Profit Participation
Agreement" is deficient because there is no showing that it
contained helpful, material evidence not reflected in the
"Memorandum" thereof, which likewise tends to show Frye's intent to
work with Ferguson in developing the land. As to the original
waiver of notice form, Frye claims that the original is necessary
to prove there was no forgery. But this presupposes the government
will produce evidence that there was a forgery. This relates to
count 18 of the indictment, which alleged false statements to Delta
in connection with a loan application, contrary to 18 U.S.C. §§
1014 and 2.40 It is apparent that a conviction on count 18 can be
683, 688-89 (5th Cir. 1994) (evidence lost before delay became
excessive not lost due to excessive delay). Here, there is no
basis for finding that, at the time of Gubert's death in 1988, the
pre-indictment delay had become undue delay.
40
The presently relevant part of count 18 is as follows:
"C. The said false and fraudulent statements were
contained in the purported application for the loan in
the name of defendant MICHAEL J. FRYE's corporation,
J.M.G. Financial Corporation, and accompanying purported
minutes of a meeting of the directors of the defendant's
corporation authorizing the defendant to purchase DELTA
REO on behalf of the corporation, and were intended by
the defendant to be included in the loan file of the
sham, nominee loan in order to enable the making of the
loan in connection with a 'cash for trash' transaction,
to avoid loans to one borrower limitations and to avoid
detection by DELTA officials and regulatory examiners of
23
obtained without reference to whether a directors' meeting was
actually held, and, further, that whether or not the minutes were
forged does not establish whether or not a directors' meeting was
held.41
In my view, there is simply insufficient evidence to establish
with the requisite degree of certainty that if a trial is held
Crouch and Frye will be convicted and in that connection will have
suffered substantial, actual prejudice from any undue delay.
I respectfully dissent. Moreover, it appears to me that this
case should be taken en banc.
the nature of the nominee loan.
D. The application and corporate minutes were
materially false in that they purported to represent the
intent of defendant MICHAEL J. FRYE that he and his
corporation be held liable for repayment of the debt,
when the defendants then and there well knew that
defendant MICHAEL J. FRYE was a mere nominee borrower who
believed himself and his company to have no actual
liability on the note. Additionally, the corporate
minutes were false in that no such directors' meeting
actually was held."
41
Moreover, there was no evidence that any expert had tried
and been unable to perform a handwriting analysis on the copy.
There was only the testimony of a nonexpert FBI special agent that
"there may be some handwriting analysis people that will work with
copies, but our people in our laboratory prefer originals." When
asked if they would work with copies, he said "I don't know. I
doubt it, but I don't know for sure. I don't think they would."
24