IN THE 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

May 30, 1996

Before POLITZ, Chief Judge, KING, GARWOOD, JOLLY, HIG GINBOTHAM,

DAVIS, JONES, SMITH, DUHÉ, WIENER, BARKSDALE, EMILIO M. GARZA,

DeMOSS, BENAVIDES, STEWART, PARKER and DENNIS, Circuit Judges.

GARWOOD, Circuit Judge:

In this prosecution for alleged savings and loan offenses, the

district court, prior to trial, di smissed the indictment against

Guy Crouch III (Crouch) and Michael Frye (Frye) for pre-indictment

delay, notwithstanding that the statute of limitations had not run.

United States v. Crouch , 835 F.Supp. 938 (S.D. Tex. 1993). The

government appeals.

The district court, following a hearing before a magistrate

judge, concluded that the delay wa s sufficiently extensive “to2

constitute substantial presumptive prejudice” and was also shown to

“have resulted in some actual p rejudice.” I d

. at 943.

Characterizing the government’s reasons for the d elay as

essentially “insufficient personnel available to investigate or

properly prepare,” the district court concluded that such reasons

were “at best, entitled to only slight weight in the balance of due

process considerations” and did not outweigh the “prejudice, actual

and presum ptive.” I d

. at 946. Although opining that the delay

“certainly smacks of negl igence,” the court determined that “the

record, in its present form, will not justify a finding of bad

faith, but because of [discovery and evidentiar y ] limitations

imposed by

. . . the Magistrate Judge, it cannot be ruled out.”

Id . at 943 & n.6.

A divided panel of this Court affirmed the dismissal of the

indictment. U

nited States v. Crouch

, 51 F.3d 480 (5th Cir. 1995).

The panel majority re cognized that for pre-indictment delay “the

triggering prejudice must be actual, not presumptive,” but

concluded that the district court’s finding of actual prejudice was

adequately supported. I d

. at 484-485. Relying on U nited States v.

Townley

, 665 F.2d 579 (5th Cir.), cert. denied

, 102 S.Ct. 2305

(1982), the panel major ity further held that no showing of

prosecutorial bad faith was required, and that instead the reasons

for the delay would be balanced against the extent of the

p rejudice. C rouch at 483. The panel majority held that the

government’s reasons

—— ”es sentially, lack of manpower and the low

priority which this investigation was assigned”

—— were “insufficient3

to outweigh the actual prejudice to Crouch and Frye.” I d

. at 485.

It concluded that “requiring Crouch and Frye to stand trial now

would be fundamentally unfair and violative of due process.” Id

.

We granted the government’s suggestion for rehearing en banc.

We now reverse the district court’s order dismissing the

indictment. We hold that where the indictment is not barred by the

statute of limitations, dismissal for pre-indictment delay requires

an appropriate showing not only of prejudice but also that the

prosecution purposely delayed the indictment to gain tactical

advantage or for other bad faith purpose. We further hold that the

present record does not support a finding of the requisite actual,

substantial prejudice

—— as opposed to potential prejudice

—— to justify

dismissal prior to trial. “Events of the trial may demonstrate

actual prejud ice, but at the present time appellees’ due process

claims are speculative and premature.” U nited States v. Marion

, 92

S.Ct. 455, 466 (1971).

BACKGROUND

Offenses Charged

The instant indictment was returned November 12, 1992. It

contains 19 counts. Crouch is named a defendant in all counts, and

Frye is named a defendant in counts 1, 2, 8, 13, and 18. The only

other defendant charged in the indictment

—— Kerry Shawell, charged

in counts 1, 2, 9 , 14, and 19

— — had pleaded guilty, and agreed to

cooperate with the government, before the hearing on the motions of

Crouch and Frye to dismiss for preindictment delay. The indictment

concerns seven loans, all of which closed June 28, 1985, made by4

Delta Savings Association (Delta), a federally-insured savings and

loan association located in Alvin, Texas. Crouch was the Chairman

of the Board of Delta, and a member of its loan committee, from

approximately January 1985 until resigning in September 1986. He

was also Delta’s attorney, and was half owner, with his father, of

the title company at which the loans in question, and apparently

many other Delta loans, closed. The seven loans included: two

(for $915, 000 and $1,439,000) to Robert Ferguson, a real estate

broker and investor, and his company, Ferguson C&D, Inc., to buy

from Bankers Savings and Loan Association (Bankers), a federallyinsured savings and loan association located in Galveston, Texas,

certain real estate on which Bankers had foreclosed (known as real

estate owned, or REO); three loans (for $505,780, $825,300, and

$1,200,000) to Mark Connally (Connally), two of which were for the

purchase from Fergus on of the REO Ferguson had purchased from

Bankers and one of which was an operating capital loan; one

$3,950,000 loan to Frye, a real estate investor and developer, and

hi s company, J.M.G. Financial Corporation (J.M.G.), to buy from

Delta a Delta REO tract; and one $1,250,000 loan to Shawell and his

company, Kerry Shawell Interests, Inc., to buy from Delta another

Delta REO tract. The indictment charges false entries, 18 U.S.C.

§ 1006; false statements, 18 U.S.C. § 1014; misap plication of

funds, 18 U.S.C. § 657; bank fraud, 18 U .S.C. § 1344; and

conspiracy under 18 U.S.C. § 371 to commit those offenses.

The conspiracy and the bank fraud (executing and attempting to

execute “a scheme and artifice to defraud Delta”) were charged in5

counts one and two, respectively, and allegedly lasted from “about

December, 1984 and continuing through on or about August 1985.”

The remaining counts are substantive counts, and are alleged to

have been committed “on or about June 28, 1985" in counts 3 through

14, and “ between June 1985 and August 1985" in counts 15 through

1 9. Counts 3 through 7 charge Crouch alone with section 657

misapplication of Delta funds as to, respectively, the two loans to

Ferguson and the three loans to Connally. Count 8 charges Crouch,

aided by Frye, with section 657 misapplication as to the Frye loan;

and count 9 charges Crouch, aided by Shawell, with section 657

misapplication as to the Shawell loan. Counts 10, 11, and 12

charge Crouch alone with section 1006 false entries as to,

respectively, each of the three loans to Connally. Count 13

charges Crouch, aided by Frye, with section 1006 false entry as to

the Frye loan; and count 14 charges Crouch, aided by Shawell, with

false entry as to the Shawell loan. Counts 15, 16, and 17 charge

Crouch alone with s ection 1014 false statements as to,

respectively, each of the three Connally loan applications. Count

18 charges Crouch and Frye with section 1014 false statements as to

the Frye loan; and count 19 charges Crouch and Shawell with section

1014 false statements as to the Shawell loan.

While certain aspects of the government’s theory of the case

are not entirely clear, it is evident that the loans to Connally,

Frye, and Shawell are all alleged to be nominee loans , with Frye

and Shawell being nominees for Ferguson, and Connally also, at

least to some extent, being a nominee for Ferguson. It may further1 The same grand jury, consistent with the government’s

recommendation, had declined to indict Barnes and Mark Connally.

6 be the government’s theory that Connally was also to some extent a

nominee for the partnership of Ben Barnes and John Connally. The

nominee status was in each instance allegedly at least in part for

the p urpose of avoiding loans to one borrower limitations,

particularly as to Ferguson. The section 1006 false entry and

section 1014 false statement counts are predicated on falsely

identifying the p articular nominee borrower (Connally, Frye, and

Shawell) as being the true borrower.

Count one, the conspiracy count, appears to essentially allege

the counts 3 through 19 substantive offenses as objects of the

conspiracy. It alleges that Crouch, Frye, and Shawell conspired

with each other and “with other individuals, both known and

unknow n.” In response to a motion for bill of particulars, the

government identified Carl Gerjes

—— who was president of Delta until

he was discharged sometime during May or June 1985

—— and Ferguson as

“[t]he unindicted co-conspirators.” The government also stated

that “argu ably” the term “may also cover” Barnes and Mark

Connally. 1 The conspiracy count also refers to activities in

furtherance of the conspiracy by “Delta insiders,” and the response

to the bill of particulars states that “Delta insiders” refers to

Gerjes, Cholakian, a De lta officer who succeeded Gerjes as

president in May or June 1985, and Erskin, another Delta officer.

The government’s general theory of the case is set forth in its

response below to Frye’s motion to dismiss for failure to charge an7

offense, as follows:

“1. Between December, 1984 and June 28, 1985,

defendant Crouch, Robert B. Ferguson and others devised

a scheme to rid Delta’s records of various tracts of real

estate acquired by the thrift through foreclosure. Part

of the scheme required that Ferguson provid e persons willing to pretend to be bona fide buyers of the property

and to sign loan contracts purporting to evidence their

purchase of the Delta real estate.

2. In furtherance of this plan, Ferguson caused

defendants Frye and Shawell to prepare loan applications,

personal financial statements, board of directors’

minutes, corporate resolutions and other documents

portraying the defendants as intended purchasers of Delta

real estate located near Houston, Texas. Additionally,

the sham buyers signed Delta loan contracts purporting to

f inance the purchases in their name. It was the

understanding of all parties that the named buyers were

mere nominee borrowers on behalf of Ferguson. All

parties to the scheme were aware that the use of nominee

borrowers was necessary in orde r to avoid loan to one

borrower limitations.

3. In furtherance of the scheme, defendant Frye

submitt ed to Delta the documents described above and

signed a s borrower on the loan supporting the

transaction. The wording of the documents was such that

they represented to persons unfamiliar with the scheme

defendant Frye’s intent to buy the real estate and to be

held personally lia ble on the real estate loan for the

purchase. The documents omitted any declaration that the

l oan was a nominee loan intended to benefit Ferguson,

defendant Crouch and others.

4. Defendant Frye participated in this scheme

because he anticipated preferential treatment by Delta in

future transactions. Additionally, defendant Frye

believed that Ferguson was acquiring Bankers Savings and

Loan Association of Galveston and that he

-- Frye

-- would receive preferential treatment there, as well.”

At the July 1993 hearing before the magistrate judge, the

government further explained its theory as follows:

“. . . as this deal was done, only Mr. Crouch was aware

of everyone’s identity and involvement. Mr. Ferguson was

purchasing a savings an d loan in Galveston. He was

attempting to swap REO properties from Banker’s to Delta.

Delta had some REO properties it needed to get rid of and

they were going to s wap or sell their properties to

Banker’s through the person of Robert Ferguson.2 Gerjes was called as a witness by Frye at the hearing.

8 Sir, Mr. Ferguson knows that properties were to be

swapped. He did not know who was purchasing the

properties until just before the closing. He didn’t know

that Ben Barnes and Mark Connally would be brought in.

We have evidence that he did not know that Mark Connally

was to be substituted in as a nominee until literally at

the closing.

There is no evidence to suggest that Ben Barnes or

Mark Connally ever heard the names Kerry Shawell or

Michael Frye. They only knew that there were loans that

they were involved in and certain circumstances.

All of these loans took place on the same day. All

of them were either closed at Defendant Crouch’s office

in Alvin; or with regards to Mr. Frye and Shawell, Robert

Ferguson actually took those documents to those

individuals and had them sign everything and had it

notarized.”

At this hearing, the government also essentially admitted it

had no direct evidence of Frye’s knowledge or involvement other

than in respect to counts 8, 13, and 18, each relating to the

$3,950,000 loan to him. To show Frye knew he was a nominee

borrower, the government stated it would rely on expected testimony

of Ferguson, Gerjes “and others, Mr. Shawell,” admissions Frye made

in July 1986 to Federal Home Loan Bank Board (FHLB) examiner Mims,

and 1986 “letters of Mr. Frye and his attorney” to Delta stating

that he “purchased the property as an accommodation to Mr. Crouch

and Mr. Ferguson.”

A nother aspect of the government’s theory of the case is

reflected by Gerjes’ testimony on cross-examination by the

government at the hearing before the magistrate judge. 2 Gerjes

stated that in his capacity as Delta’s president he had negotiated

and dealt with Barnes and Mark Connally in regard to the charged9

Mark Connally loans as part of an effort to rid Delta of REO. He

did not recall in this regard “any one person direc ting me” or

“anyone saying, you definitely do this or you definitely do that,”

or “that anyone specifically assigned me” that responsibility.

Typically, he would “report back to a loan committee meeting and

tell them of my findings” and “about what” he was “negotiating with

Barnes/Connally.” Crouch was on the loan committee. Gerjes also

testified that he was not at the June 28, 1985, loan closings

because Crouch had fired him as Delta’s president about a month

e arlier, although he remained “technically on the rolls of De lta

for some time after that.”

In its response to the motion for bill of particulars, the

government described “Defendant Crouch’s obtained benefit” from the

various charged offenses as follows:

“His law firm earned legal fees. His title company

earned title relate d fees. He earned fees and bonuses

related to his board of directors position. His actions

kept the federal regulators from immediately taking over the institution which would have caused any stock owned

by Crouch and his family to be worthless.”

The record suggests that Crouch personally owned about 5% of

Delta’s stock. His father, who was not on the board at any time

during or after 1985, owned about 34% of the stock, and another

some 34% was owned by board member Gubert, who preceded Crouch as

chairman.

Investigation

Delta was app arently placed under state supervision and

control in May 1986, as reflected in a report of examination

prepared by FHLB examiner Mims, a copy of which is attached as an3 Alt hough this document states that it is a report of

“Examination As Of March 10, 1986,” it refers to events occurring

well after March 1986.

10 exhibit to Crouch’s motion to dismiss for pre-indictment delay. 3

Delta was apparently complete ly taken over by the authorities in

S eptember 1986. The report attached to Crouch’s motion concerns

many aspects of Delta’s operations and financial co ndition, and

includes specific questioning of certain loans, including the seven

loans at issue here, as well as, among others, certain unrelated

loans to one Carl Vaughan. The report concludes, among other

things, th at “[a]ll aspects of the JMG and Shawell transactions

indicate that JMG and Shawell were acting as nominees for Ferguson

C &D, Inc.,” that there were “willful violations of the loans- toone-borrower limitation” with res pect to Ferguson, among others,

that review of title company and Delta records pertaining to the

seven loans reflect “an apparent attempt by the association and

borrowers to misrepresent material facts,” that “certain aspects of

the transaction appear to fall within the purview of Title 18,

United States Code Section 1001," and that “[ t]he examiner

concludes that the Loan Committee was aware of the material

violations of the loans-to-one-borrower limitations.” This report

likewise reflects the following statements by then Delta president

Cholakian:

“In response to the loan underwriting deficiencies

uncovered during the examination, President Terry

Cholakian stated that former Managing Officer Carl Gerjes

and former Senior Vice President of Real Estate Lending

W.A. Erskine had li ttle regard for loan underwriting

regulations. According to Ms. Cholakian, Messrs. Gerjes

and Erskine were primarily concerned with closing loans11

now and worrying about regulations later.

. . . President Cholakian remarked that prio r to July

1985, loans wer e closed outside of the Loan Committee.

Messrs. Gerjes and Erskine ag reed to loan commitments

first and then presented the details to the full

committee, at which point all committee mem bers were

expected to sign.

Loan Committee procedures have changed since July 1985.

According to Ms. Cholakian, all loans are now approved

during committee meetings, and underwriting guidelines

and procedures have been established.

. . . .

President Cholakian provided the following statement with

regard to the transactions involved with the

aforementioned two escrow closings [Frye and Shawell]:

‘ In addressing the situation on the Ferguson direct loans

and nominee loans, I have infor med you and your staff

that neither I, nor any other member of current

management, has all of the facts surrounding this

arrangement. This was put together by the former

president, Carl Gerjes, and I have not been able to find

any written documentation or clarification of the

transaction. I have also not been able to find any

written agreements that outline the transaction and

expected actions of the parties.

‘It has become clear to us, here now, that JMG and

Shawell are nominees for Ferguson. We had to deduce that

from the subsequent actions and responses of JMG and

Shawell on requests for financial statements and interest

payments. . . .’”

In August 1986, the FHLB examiner sent “criminal referrals” to

the FBI and the United States Attorney with respect to Delta

concerning at l east these seven loans and the Carl Vaughan

transactions, and at least the former implicated Crouch and Frye,

among others, though Crouch’s name was not among the target names

listed on the cover sheet (whether Frye’s was is not stated). FBI

special agent Kettler, in charge of the Delta investigation during

most of the time thereafter, testified that such a referral was4 The statute of limitations was extended to ten years

effective August 1989, except for offenses as to which the statute

had run prior to that time. 18 U.S.C. § 3293.

12 “generally a summary of an event or a transaction that the examiner

feels that needs to be looked into as far as possib le criminal

involvement or needs some work for a criminal investigation.”

Kettler testified he worked on the ma tter off and on since then,

but not on a concentrated basis until 1991. In April 1987 Kettler

received another FHLB criminal re ferral in reference to

“bonuses”

—— apparently some form of kickbacks

—— paid Gerjes (and also

involving Cholakian) in 1983 and 1984. He focused on this because

of the five-year statute of limitations. 4 Gerjes was indicted for

these “bonus” offense s in the summer of 1989, and was tried and

convicted of them later that year. Crouch’s father testified

against Gerjes at this trial, and though Crouch did not testify, he

apparently had been subpoenaed by the government and was ready to

testify to identify records. In July 1987, Kettler received still

another FHLB criminal referral concerning Delta, this time also in

relation to certain o ther matters not involved in this case. In

August 1986 in the Galveston area of the Southern District of

Texas

—— the locus of the offenses at issue

—— there were only three FBI

agents, and there was no financial anal yst or similarly skilled

person. Of the three agents, one worked exclusively on drug cases.

Kettler and the other agent were responsible for all other federal

offenses. A fourth agent was added in late 1987, but she was soon

reassigned to Houston and did not return until the summer of 1988.

During this time there were seven financial institutions, including13

Delta, under investigation by these two agents. There were also

many other cases, including the “McConnell case,” which came into

Kettler’s office about three months after the first Delta referral

and which he described as “about the largest white collar fraud

that we had in the Houston division.” Kettler worked “exclusively”

on that case for “six months or so.” The disappearance of a young

girl and a case of ongoing industrial espionage at Dow Chemical

also each involved significant amounts of time. Priority was

assigned to cases involving danger to human life, ongoing offenses,

and cases in which limitations were close to running. A fifth

agent was added in 1990, and a si xth and seventh and a financial

analyst were added in 1991.

In 1990, after Gerjes’ conviction and sentencing in the bonus

case, Kettler began focusing more on Delta, gathering and examining

documents. There were forty boxes of records. Kettler interviewed

employees at Delta (some before Delta closed), and he interviewed

Mims (with whom he had previously talked on the telephone) in 1991

a nd Frye some time in 1990 (after September of that y ear) or

possibly 1991. In January 1992, Ferguson pleaded guilty to charges

in connection with the instant transactions pursuant to a deal,

and, according to the government’s response to Crouch’s motion to

dismiss, Ferguson “gave information which focused the government’s

investigation squarely on defendants Crouch, Frye and Shawell.” In

March 1992 Gerjes pleaded guilty to charges in connection with the

instant transactions and likewise agreed to cooperate wit h the

government. Gerjes’ sentencing on this conviction has apparently5 Ot her evidence presented by Crouch indicated the records

then procured may have consisted of or included documents related

to other loans, and did not include those relating to Mark

Connally.

14 been postponed, as has Ferguson’s sentencin g, pending their

testimony in Crouch and Frye’s anticipated trial.

Frye testified before the grand jury in November 1992. Crouch

never testified before the grand jury.

Crouch testified at the hearing before the magistrate judge on

the motion to dismiss. He related that in the spring of 1986, when

Mims examined Delta, Mims requested, and received from Crouch, the

Delta records concerning the transactions in question and said “no,

we do not” when Crouch asked “if he had any pro blems with me in

c onnection with those transactions.” Crouch also stated that he

and his father were visited in 1989 by an Assistant United States

Attor ney in connection with the Gerjes bonus prosecution and was

told that he, Crouch, “was not the subject of an investigation.”

In September or October 1990, Kettler came to Crouch’s title

company to get documents consisting of or including those

concerning these loans, and was furnished copies. Kettler, in

response to Crouch’s inquiry, said Crouch was not a subject of the

investigation. Kettler returned in June or September 1991 with a

subpoena and p rocured the original records. 5 Again on this

occasion, Kettler responded “no” to Crouch’s inquiry whether he was

a subject of the investigation. In March 1992, Crouch was told he

was a subject of the grand jury investigation and might be indicted

( Frye was also so notified at that time). Other aspects of15

Cro uch’s testimony and other evidence at the hearing before the

magistrate judge are related below in connection with our

consideration of the showing of prejudice. Frye did not testify

before the magistrate judge.

Rulings Below

The magistrate judge recommended granting the motion to

dismiss. He concluded that the delay in indictment was

presumptively prejudicial, relying on Doggett v. United States

, 112

S.Ct. 2686 (1992) , although recognizing D oggett was a Sixth

Amendment case. He further opined that “[w]hile the Court must

confess that Crouch and Frye cannot, for the most part, identify

with specificity the actual harm they have suffered as a result of

the eight year lapse of time,” nevertheless they had “with the

added assistance of the presumption attenda nt to the eight-year

delay, proven the existence of substantial prejudice.” Relying on

Townley

, the magistrate judge ruled that no showing of bad faith

was required, stating “this Court will not, and need not, decide

the issue of bad faith.” Instead, the magistrate judge balanced

t he prejudice against the reasons for the delay. It weighed the

balance in favor of the defense, noting that “low priority assigned

to an investigation, overload of other investigative or prosecutive

responsibilities, and insufficient personnel, similar to the

reasons offered in the case at bar, are entitled to only slight

weight in the balance.” However, the magistrate judge did commend

the current prosecutor’s handling of the case since its assignment

to him in May 1991.16

The di strict court adopted the magistrate judge’s report,

except as modified and su pplemented in the district court’s

opinion. C rou ch , 835 F.Supp. at 938. The district court found

that there was presumptive prejudice under Doggett and that the

defendants had also shown “some actual pr ejudice to supplement

t heir reliance on the presumption.” I d

. at 943. Relying on

Townley

, the court did not require a finding of bad faith, which it

correctly stated the record “will not justify.” However, because

of the discovery and evidentiary limitations imposed by the

magistrate judge, the court stated that it “cannot be ruled out”

and “may have to be addressed on another day.” Id . at 943 & n.6.

The court did state that the delay in indictment “certainly smacks

of negligence.” Id . at 943. The court concluded that Crouch was

a “target” prior to Ferguson’s guilty plea. I d

. It did not find,

however, and nothing in the record tends to show, that the

government, whatever it might otherwise have believed or suspected,

could have presented a winna ble case against Crouch without the

testimony of either Ferguson, Gerjes, Shawell, or Frye. The court

further held that the reason for the delay advanced by the

government, “insufficient personnel available to investigate or

properly prepare this case,” was “at best, entitled to only slight

weight in the balance,” and was outweighed by the “prejudice,

actual and presumptive,” to the defendants, thus requiring

dismissal of the indictment. Id . at 946.

DISCUSSION17

Bad Faith Requirement

In United States v. Marion . 92 S.Ct. 455 (1971), the Supreme

C ourt first addressed pre-indictment delay where limitations had

not run. There, the district court had granted, prior to trial,

the defen dants’ motion to dismiss, which asserted that, although

the statute of limitations had not expired, the 38-month preindictment delay violated their rights to due process and to a

speedy tri al under the Fifth and Sixth Amendments. I d

. at 457.

The district court concluded that the government had been “aware of

the relevant facts” more than two years prior to the indictment.

Id

. at 458. The government appealed directly to the Supreme Court

under former 18 U.S.C. § 3731. The Court held that the Sixth

Amendment speedy trial clock did not start running until the return

of an indictment or other formal charge “or else the actual

restraints imposed b y arrest and holding to answer a criminal

charge.” I d

. at 463. Though conceding that “[p]assage of time,

whether before or after arrest, may impair memories, cause evidence

to be lost, dep rive the defendant of witnesses, and otherwise

interfere with his ability to defend himself,” the Cou rt also

recognized th at “[p]ossible prejudice is inherent in any delay,

however short; it may also weaken the Government’s case.” Id . at

464 (footnote omitted). S ee also id

. at 465 (“Actual prejudice to

the defense may result from the shortest and most necessary

delay”). Two principal reasons were noted for declining to apply

the Sixth Amendment to pr e-indictment delay. First, “[a]llowing

inquiry into when the police could have arrested or when the18

pro secutor could have charged would raise difficult problems of

proof. As one court said, ‘the Court would be engaged in lengthy

hearings in every case to determine whether or not the prosecuting

authorities had proceeded diligently or otherwise.’” I d. at 464

n.13. Second, and more prominently: “‘the applicable statute of

limitations

. . . is the primary guarantee against bringing overly

stale criminal charges’” (quoting United States v. Ewell

, 86 S.Ct.

773, 776 (196 6)), and “[s]uch statutes represent legislative

assessments of relative interests of the State and the defendant in

administering and receiving justice . . . .” Id . at 464.

However, Marion went on to hold that:

“the statute of limitations does not fully define the

appellees’ rights with respect to the event s occurring

prior to indictment. Thus, the Government concedes that

the Due Process Clause of the Fifth Amendment would

require dismissal of the indictment if it were shown at

trial that the pre-indictment delay in this case caused

substantial prejudice to appellees’ rights to a fair

trial a nd that the delay was an intentional device to

gain tactical a dvantage over the accused.” I d

. at 465

(emphasis added).

The Court also noted “we need not, and could not now, determine

when and in what circumstances actual prejudice resulting from preaccusation delays requires the dismissal of the pro secution” and

indicated such a determination “will necessarily involve a delicate

judgment based on the circumstances o f each case.” I d

. at 466.

The Court then proceeded to reverse the order of dismissal, holding

there was no Sixth Amendment violation and that, as to due process:

“[n]or have appellees adequately demonstrated that the

pre-indictment delay by the Government violated the Due

Process Clause. No actual prejudice to the conduct of

the defense is alleged or proved, and there is no showing

that the Government intentionally delay ed to gain some19

tactical advantage over appellees or to h arass them.”

Id . at 466.

The opinion’s final sentence noted that “[e]vents of the trial may

demonstrate actual prejudice, but at the present ti me appellees’

due process claims are speculative and premature.” Id

.

The Supreme Court n e xt addressed pre-indictment delay in

United States v. Lovasco

, 97 S.Ct. 2044 (1977), which again

involved a dismissal prior to trial. There the district court,

following a hearing, dismissed the indictment bec ause of a

seventeen-month delay, during the last some six months of which a

defense witness died, between the time the government had “all the

information relating to the defendant’s alleged commission of the

offenses” and its presentation to the grand jury. The “Government

made no systematic effort in the District Court to explain its long

delay” and a divided panel of the Eighth Circuit affirmed (as to

all but one count), sustaining “the District Court’s finding that

the Government’s actions were ‘unjustified, unnecessary, and

unr easonable’” and that the defense had been impaired by the

witness’s death. I d

. at 2047. The Supreme Court reversed. It

initially reiterated that “statutes of limitations

. . . provide ‘”

the primary guarantee , against bringing overly stale criminal

charges”’” (quoting Marion ’s quoting of Ewell ), and that “the Due

Process Clause has a limited role to play in protecting against

oppressive delay.” I d

. at 2048. The Court next held that M arion ’s

concluding sentence “establishes only that proof of actual

preju dice makes a due process claim concrete and ripe for

adjudication, not that it makes t he claim automatically valid.”20

Lovasco at 2048. “ M arion makes clear that proof of preju dice is

generally 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.” L ovasco at

2048-49. The Court then observed that the due process clause

affords protection “only” for violations of “those ‘fundamental

conceptions o f justice which lie at the base of our civil and

political institutions’” (quoting Mooney v. Holohan

, 55 S.Ct. 340,

342 (1935)), and “does not permit courts to abort criminal

prosecut i ons simply because they disagree with a prosecutor’s

judgment as to when to seek an indictment.” L o vasco at 2049.

Further: “Judges are not free, in defining ‘due process,’ to

impose on law enforcement officials our ‘personal and private

notions’ of fairness and to ‘disregard the limits that bind judges

in their judicial function.’” Id . (quoting Rochin v. California

,

72 S.Ct. 205, 209 (1952)).

Lovasco ne xt rejects the contention that the Constitution

requires that charges be file d promptly “once the Government has

a ssembled sufficient evidence to prove guilt beyond a reasonable

doubt.” I d

. at 2050. It notes that such a rule “would cause

numerous problems in those cases in which a criminal transaction

involves more than one person or more than on e illegal act,” and

that “if courts were required to decide in every case when the

prosecution should have commenced, it would be necessary for them

to trace the day-by-day progress of each investigation,” thus

burdening both prosecutors and courts. Id . & n.14. It concludes6 The Lovasco Court appended a footnote to this sentence

stating:

“In Marion we noted w ith approval that the

Government conceded that a ‘tactical’ delay would violate

the Due Process Clause. The Government renews that

concession here, Brief for United States 32, and expands

it somewhat by stating: ‘A due process violation might

also be made out upon a showing of prosecutorial delay

incurred in reckless disregard of circumstances, known to

the prosecution, suggesting that there existed an appreciable risk that delay would impair the ability to

mount an effective defense.’ id

. at 32-33, n.25. As the

Government notes, however, there is no evidence of

recklessness here.” L ovasco at 2051 n.17 (emphasis

added).

21 in this respect: “We can find no such command in the Due Process

Clause of the Fifth Amendment. In our view, investigative delay is

fundamentally unlike delay undertaken by the Government solely ‘to

gai n tactical advantage over the accused’. . . .” I d

. at 2051

(quoting Marion

, 92 S.Ct. at 465). 6 L ovasco goes on to “hold that

to prosecute a defendant following investigative delay does not

deprive him of due process, even if his defense might have been

prejudiced by the lapse of time.” I d

. at 2051-52. Thus, the Court

holds that the Court of Appeals erred in affirming the dismissal of

the indictment. I d

. at 2052. In what might be described as a

postscript, the Lovasco Court goes on to observe that “neither this

Court nor any lower court has had a sustained opportunity to

consid er the constitutional significance of various reasons for

delay. We therefore leave to the lower courts, in the first

instance, the task of applying the settled principle of due process

that we have discussed to the particular circumstances of7 In a footnote appended to the first of these sentences, the

Court observes that a law review article “has catalogued some of

the noninvestigative reasons for delay” and proceeds to quote

several passages from the article, in cluding its references to

maintenance of an informer’s cover, “‘other motives

. . . including

some sinister ones,’” and its reference to the fact that “‘various

prosecutorial decisions

—— suc h as the assignment of manpower and

priorities among investigations of known offences

—— may also affect

the length of such delays.’” I d

. fn.19 (quoting Amsterdam, Speedy

Criminal Trial: Rights and Remedies , 27 Stan. L.R. 525, 527-28

(1975)). The footnote then gives a “see also” citation to Justice

Brennan’s concurring opinion in Dickey v. Florida , 90 S.Ct. 1564,

1572-73 & n.9 (1970). We observe that the indicated pages of

Justice Brennan’s concurrence in Dickey (in which Justice Marshall,

author of Lovasco

, joined) discuss considerations pertaining to

whether the Sixth Amendment’s speedy trial guarantee is applicable

“to delays occurring before arrest or indictment.” I d

. at 1572.

Justice Brennan’s opinion remarks that “[d]eliberate governmental

delay designed to harm the accused, however, constitutes abuse of

the criminal process.” I d

. at 1573. In a footnote, Justice

Brennan also states, inter alia

, “Delay, of course, may also result

because the government lacks sufficient resources to move more

quickly or because it negligently fails to act. When delay is not

the result of an intentional attempt to strengthen the government’s

case, it will very likely make more difficult proof of the

accused’s guilt.” Id . n.9.

22 individual cases.” Id

. 7

Our decisions following M arion and before Lovasco generally

construed Marion as stated in United States v. Butts

, 524 F.2d 975,

977 (5th Cir. 1973), viz :

“In United States v. Marion

, . . . the Supreme Court held

that the applicable statute of limita tions being the

primary guarantee against bringing overly stale criminal

charges, one m ust show (1) that substantial prejudice

resulted from the delay in seeking an indictment and (2)

that the delay was an intentional measure to gain a

tactical advantage before the indictment can be

dismissed.” (Emphasis added).

Other decisions of ours to the same effect include United States v.

Beckham

, 505 F.2d 1316, 1319 (5th Cir.), cert. denied

, 95 S.Ct.

1683 (1975); United States v. Duke

, 527 F.2d 386, 388, 390 (5th

Cir.), cert. denied

, 96 S.Ct. 3177 (1976); United States v.8 One of our decisions in this time frame states in its text

the rule essentially as stated in Butts

, Duke

, and our other abovecited cases, but in a footnote suggests that it could be an open

question whether the two requirements as stated in Butts might be

considered alternative, rather than cumulative, requirements.

United States v. Avalos

, 541 F.2d 1100, 1107 & n.9 (5th Cir. 1976),

cert. denied , 97 S.Ct. 1656 (1977). However, it is certainly now

clear that delay caused prejudice alone does not suffice. L ovasco

, 97 S.Ct. at 2048-49, 2051-52. Hence, the requirements cannot be

alternative.

23 Scallion , 533 F.2d 903, 912 (5th Cir. 1976), r eh’g on oth er grds

denied

, 548 F.2d 1168 (5th Cir. 1977), cert. denied

, 98 S.Ct. 2843

(1978); and United States v. Manetta

, 551 F.2d 1352, 1354 (5th Cir.

1977). S ee also United States v. Croucher

, 532 F.2 d 1042, 1044

(5th Cir. 1976). 8

Since Lovasco

, the overwhelming majority of our decisions have

stated the rule e ssentially as we had stated it in B utts

, supra

.

Thus, in U

nited States v. Willis

, 583 F.2d 203, 207 (5th Cir.

1978), we wrote that to prevail on a claim of preindictment delay

“ the accused must show that: (1) substantial prejudice resulted

from the delay and (2 ) the delay was an intentional measure in

order to gain a technical advantage.” In U nited States v. Durnin

,

632 F.2d 1297 (5th Cir. 1980), we rejected a due process claim of

preindictment delay 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 gove rnment could have

brought an indictment and when it finally chose to do so.

However, to establish a violati on of the Due Process

Clause in this context, appell ant m ust show, not only9 In addition to Byrd, Durnin

, an d Willis , the post- L ovasco

published opinions referred to include: U nited States v. Neal

, 27

F.3d 1035, 1041 (5th Cir. 1994), cert. denied

, 115 S.Ct. 1165

(1995); 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. 1991); Dickerson v. Guste , 932 F.2d 1142,

1144 (5th Cir.), cert. denied

, 112 S.Ct. 214 (1991); United States

v. Delari o , 912 F.2d 766, 769 (5th Cir. 1990); U nited States v.

Varca

, 896 F.2d 900, 904 (5th Cir.), c ert. denied

, 111 S.Ct. 209

(1990); United States v. Carlock

, 806 F.2d 535, 549 (5th Cir.

198 6), cert. denied , 107 S.Ct. 1611 (1987); U nited States v.

24 substantial prejudice flowing from an inordinate delay,

but also a motive on th e part of the prosecutor to use

the delay to gain a tactical adva ntage . . .[citing

Lovasco, Marion, and Willis ]. Appellant does not contend

that the go vernment sought to delay his indictment for

tactical advantage, and the district court specifically

found that the delay resulted from the government’s goodfaith attempt to asc ertain appellant’s guilt beyond a

reasonable doubt. Trial Transcript, vol. 3, at 78.

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).

More recen tly, we wrote in U nited States v. Byrd

, 31 F.3d 1329,

1339 (5th Cir. 1994), that: “To 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 a nd that the defendant incurred substant ial

prejudice as a result of the delay.” (Emphasis in original). In

all, since Lo vasco at least twenty-nine different judges of this

Court

—— including twenty-five of the thirty-three judges who have

served either as active o r senior judge of this Court since it

split October 1, 1981

—— have authored, or joined without reservation,

unanimous publi s hed opinions in some eighteen different cases

holding or stating in substance just what we said in Byrd

, Durnin

,

and Willis

. 9Johnson , 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. Wehling

, 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);

and United States v. Ramo s , 586 F.2d 1078, 1079 (5th Cir. 1978).

O f course, there are also the numerous post- Marion

, pre- Lov asco

cases to the same effect, such as Butts ; Beckham; Duke; Scallion;

and Manetta

.

25 We recognize that language to the contrary may be found in a

scattered few of our opinions . For example, in U nited States v.

Brand , 556 F.2d 1312 (5th Cir. 1977), cert. denied , 98 S.Ct. 1237

(1978), we rejecte d the defendant’s preindictment delay claim

because he had not demonstrated any prejudice. Id . at 1316-1317.

The Brand panel then appended a f ootnote expressing its

disagreement with the government’s c ontention that “both actual

p rejudice and intentional tactical delay” had to be shown

,

asserting that instead the validity of a preindictment delay claim

“depends on the due process balancing between the extent of the

actual prejudice and the governmental interests at stake.” I d

. at

1317 n.7. We did not there engage in any such balancing, however,

for we had already found no actual prejudice (nor did we even

identify or assess the reasons for the delay or “the governmental

interests at stake”). The B rand footnote is pure dicta. The panel

and the district court placed primary reliance on Townley

—— a quorum

decision by two judges

—— where, in affirming Townley’s conviction,

we rejected his claim that the district court had erred in

overruling his motion to dismiss for preindictment delay. The

Townley panel concluded that “the lengthy pre-indictm ent delay26

somewhat prejudiced Townley,” id . at 586, but was not due to “bad

faith motive to prejudice” hi m. Id . at 581. Relying on B rand ’s

footnote 7, the opinion declined to affirm on that basis, but

rather asserted that resolution of th e issue “turns upon whether

the degree of prejudice thereby sustained by the accused is

sufficiently balanced by the good faith reasons advanced by the

government.” T ownley at 582. We ultimately concluded that the way

the trial had actually unfolded, and particularly th e way the

government had 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.

Townley notwithstanding, it is plain that the vast majority of

this Court’s opinions have follow ed the contrary approach as

reflected in Butts, Durnin, Byrd , and the other opinions cited in

note 9, supra

. Although as an en banc court we are not strictly

b ound by prior panel decisions, we now choose to follow the vast

majority of our prior opinions in thi s respect and to reject the

Townley

approach.

We recognize that neither Marion nor Lovasco is crystal clear

on this issue, and each opinion contains some language that can

give comfort to either view. However, we believe that the better

reading of these opinions is that the Supreme Court, in instances

where the statute of limitations has not run, has refused to27

recognize a claim of preindictment delay absent some bad faith or

improper purpose on the part of the prosecution. Both Marion and

Lovasco emphasize that “the primary” protection against

preindictment delay is the statute of limitations, and that the due

process clause has but “a limited role to play.” L ovasco at 2048.

The only due process violation specifically recognized is where the

delay not only “caused substantial prejudice” but also “was an

intentiona l device to gain tactical advantage.” M arion at 465.

Marion reversed the dismissal for preindictment delay stating

“there is no showing that the Government intentionally delayed to

gain some tactical advantage over appellees or to harass them.”

Id

. at 466. L ovasco rejects the notion that prejudice from

preindictment delay is a sufficient, rather than merely a

necessary, condition for relief, id

. at 20 48-49, 2051-52. It

likewise rejects the conten tion that the due process clause

proscribes delay beyond t he time the prosecution has assembled

sufficient evidence to prove guilt beyond a reasonable doubt. I d

.

at 2050-51. L ovasco refuses to proscribe investigative delay

because such “delay is fundamentally unlike delay undertaken by the

Government solely ‘to gain tactical advantage over the accused.’”

Lovasco at 2051 (quoting Marion at 465). Moreover, L ovasco

, rather

than remanding for reconsideration in light of its principles,

flatly held that the dismissal of the indictment was error despite

the findings of both the district court and the Court of Appeals

that the delay not only caused actual prejudice to the accused but

was also “‘unjustified, unnecessary, and unrea sonable,’” i d

. at1 0 I ndeed, such disagreement would be most unusual, given the

Supreme Court’s well-established “two court” doctrine. S ee, e.g.,

Graver Tank & Mfg. Co. v. Linde Air Products Co

., 69 S.Ct. 535, 538

(1949) (Supreme Court will not “undertake to review concurrent

findings of fact by two courts below in the absence of a very obvious and exceptional showing of error”).

28 2047, findings the Supreme Court never expressly disagreed with or

determined to be clearly erroneous. 10 Indeed, both L ovasco and

Marion indicate the undesirability of attempting to make such

determinations. See, e.g., Marion at 464 & n.13; Lovasco at 2050

& n.14. Finally, neither M arion nor Lovasco mentions any

“balancing” or “weighing” of the extent of th e prejudice against

the relative merit of the reasons for the delay. Indeed, the

closest th ing to a reference to balancing is M arion ’s statement

that limitations statutes “represent legislative assessments of

relative interests of the State and the defendant.” I d

. at 464

(emphasis added).

Crucially, the Supreme Court itself, albeit in dicta, appears

to have interpreted Marion and Lovasco in essentially the same

manner as we did in Byrd

, Durnin

, Butts

, and our other cases cited

in note 9, supra

. Thus, in U nited States v. Gouveia

, 104 S.Ct.

2292, 2299 (1984), the Court stated:

“But applicable statutes of limitations protect against

the prosecution’s bringing stale criminal charges against

any defendant, United States v. Lovasco

, supra

, 431 U.S.,

at 788-789, 97 S.Ct., at 2047-2048; U nited States v.

Marion, supra , 404 U.S., at 322, 92 S.Ct., at 464, and,

beyond that protection, the Fifth Amendment requires the

dismissal of an indictment, even if it is brought within

the statute of limitations, if th e defendant can prove

that the Government’s delay i n bringing the indictment

was a deliberate device to gain an advantage over him and

that it caused him ac tual prejudice in presenting his

defense. United States v. Lovasco

, supra , 431 U.S., at29

789-790, 97 S.Ct. at 2048-2049; United States v. Marion,

supra

, 404 U.S., at 324, 92 S.Ct. at 465.” (Emphasis

added).

More recently, in Arizona v. Youngblood

, 109 S.Ct. 333 (1988), the

Court, in support of its holding that “unless a criminal defendant

can show bad faith on the part of the police, failure to preserve

potentially useful evidence does not constitute a denial of due

process of law,” stated that:

“Our decis ions in related areas have stressed the

i mportance for constitutional purposes of good or bad

faith on the part of the Government when the claim is

based on loss of evidence attributable to the Government.

In United States v. Marion , 404 U.S. 307, 92 S.Ct. 455,

30 L. Ed.2d 468 (1971), we said that ‘[n]o actual

prejudice to the conduct of the de fense is alleged or

proved, and there is no showing that the Government

intentionally delayed to gain some tactical advantage

over appellees or to harass them.’ I d

. at 325, 92 S.Ct.,

at 466; see also United States v. Lovasco

, 431 U.S. 783,

790, 97 S.Ct. 2044, 2048, 52 L.Ed.2d 752 (1977).” I d

. at

337.

A significant majority of o ur sister circuits appear to now

follow the same rule, namely that where limitations has not run

dismissal for preindictment delay requires a showing not only of

substantial, actual prejudice, b ut also that the prosecutor

intentionally delayed to gain tactical advantage or to advance some

other improper purpose. S ee, e.g., United States v. Mills

, 925

F.2d 455, 464 (D.C. Cir. 1991), cert. denied

, 113 S.Ct. 471 (1992)

(“.

. . pre-indictment delay

. . . offends due process if the

defendant can carry the burden of showing (1) that the government

delayed bringing the indictment in order to gain a tactical

advantage; and (2) that the delay caused him actual and substantial1 1 In support of this statement, Mills cites, among other cases,

Gouveia and our opinion in United States v. Delario

, 912 F.2d 766,

769 (5th Cir. 1990). Mills at 464.

1 2 Cr ooks was authored by then Circuit Judge, now Justice,

Breyer. Other First Circuit opinions to the same effect as the

above passage from Crooks and in which then Circuit Judge Breyer

concurred include United States v. Acevedo

, 842 F.2d 502, 504 (1st

Cir. 1988); United States v. Ricciandra

, 788 F.2d 39, 42 (1st Cir),

cert. denied

, 107 S.Ct. 166 (1986); and United States v. Marler

, 756 F.2d 206, 213 (1st Cir. 19 85). These authorities have more

recently been reaffirmed in United States v. McCoy , 977 F.2d 706,

711 (1st Cir. 1992).

1 3 In Hoo

, the Second Circuit affirmed the denial of defendant’s

motion to dismiss for preindictment delay, stating:

“ Because appellant has made no showing of an improper

prosecutorial motive, however, we find no deprivation of

appellant’s constitutional rights.

In United States v. Marion , 404 U.S. 307, 92 S.Ct.

455, 30 L.Ed.2d 468 (1971), the Supreme Court held that

the due process clause requires the dismissal of an indictment because of preindictment delay only when the

delay causes ‘substantial prejudice’ to the defense and

the delay is an ‘inte ntional device to gain tactical

advantage over the accused.’ I d

. at 324, 92 S.Ct. at

465.

. . . In any event, appellant has failed to show

that the government had improperly delayed his

prosecution in order to gain a tactical advantage.” I d

. at 671.

In his dissent from the denial of certiorari in Hoo

, Justice White

noted that the First, Third, Tenth, and Eleventh Circuits, as well

30 prejudice”); 11 United States v. Crooks

, 766 F.2d 7, 11 (1st Cir.),

cert. denied , 106 S.Ct. 421 (1985) (“An indictment brought within

a n applicable statute of limitations period is, constitutionally

speaking, late only if the delay significantly prejudices the

defendant and the government ‘intentionally delayed’ the indictment

‘to gain an unfair tactical advantage or for other bad faith

motives’”; emphasis added); 1 2 United States v. Hoo

, 825 F.2d 66 7

,

671 (2d Cir. 1987), cert. denied

, 108 S.Ct. 742 (1988 ); 13 Unitedas the Second, “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,” that the Fourth and Ninth Circuits applied

a balancing test, and that there were intra -circuit conflicts in

the Fifth and Seventh Circuit s. Hoo v. United States , 108 S.Ct.

742 (1988).

14 In Sowa , the Seventh Circuit stated:

“To establish that a pre-indictment delay violated

due process, 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 delayed

indictment to gain a tactical advantage or some other

impermissible reason. U nited States v. Marion

, 404 U.S.

307, 325, 92 S.Ct. 455, 465, 30 L.Ed.2d 468 (1971). . .

. The district court . . . found that Sowa had proved

actual and substantial prejudice resulting from the

delay. . . .

. . . .

31 States v. Ismaili

, 828 F.2d 153, 167 (3d Cir. 1987) (“to sustain a

dismissal of charges on t he grounds of pre-indictment delay

pursuant to the Due Process Clause, a defendant must bear the

burden of proving two essential facts: (1) that the government

intentionally delayed in order to gain some tactical advantage over

him, and that (2) this intentional delay caused the defendant

actual prejudice”; footnote omitted); United States v. Brown , 959

F.2d 63, 66 (6th Cir. 1992) (“This court has consistently read

Lovasco to hold t hat ‘dismissal for pre-indictment delay is

warranted only when the defendant shows [1] substantial prejudice

to his ri ght to a fair trial a nd [2] that the delay was an

intentional device by the go vernment to gain a tactical

advantage’”); United States v. Sowa

, 34 F.3d 447, 450 (7th Cir.

1994); 14 Unit ed States v. Engstrom , 965 F.2d 836, 839 (10th Cir.Sowa’s claim, however, fails to meet the requirements of

the second prong. With respect to the government’s

delay, due process is only implicated if the government

purposely delayed the indictment to take advantage,

tactically, of the prejudice or otherwise acted in bad

faith.” Id . at 450.

1 5 In United States v. Stierwalt

, 16 F.3d 282, 285 (8 th Cir.

1994), the Court rejected the defendant’s c laim of preindictment

de lay, stating “[u]nless there is a showing that the government

intentionally d elayed indictment to harass or to gain a tactical

advantage, there can be no due process violation.” The court also

observed that “there is no intimation that the preindictment delay

was intentional and designed to gain a tactical advantage over or

to harass Stierwalt”. The rule is similarly stated in U nited

States v. Scoggins

, 992 F.2d 164, 166-167 (8th Cir. 1993).

However, in United States v. Miller

, 20 F.3d 926 (8th Cir.), cert.

denied , 115 S.Ct. 226 (1994), the Court, without citing Stierwalt

or Scoggins

, stated that if act ual prejudice is established “the

court will then inquire into the reasons for the delay and balance

those reasons against the demonstrated prejudice .” Id . at 931.

The C ourt ultimately affirmed the conviction, and stated in a

footnote concerning periods of de lay not “due to legitimate

investigatory needs” that those “appear to be due to administrative

delays, inertia or at worst negligence. We agree with the

magistrate’s finding that ‘there was absolutely no evidence that

the delay was for strategic reasons.’” Id. & n.5.

32 1992) (“there must be both a showing of actual prejudice and

evidence that the delay was purposeful in order to gain a tactical

advantage

. . . a defendant must meet this two-pronged test”);

United States v. Hayes

, 40 F.3d 362, 365 (11th Cir. 1994) (“In this

circuit, the defendant must show that he suffered substantial

prejudice and that the delay was the product of deliberate action

by the Government to gain a tactical advantage”). 15

We conclude that several other cons iderations also strongly

militate against utilizing a T ownley -type balancing test to

determine whether prejudicial preindictment delay violates due

process and in favor of requiring that the delay have been

intentionally caused by the prosecution to gain a t actical1 6 Inferentially, Townley would also grant relief whenever any actual prejudice resulted from delay intentionally caused to gain

tactical advantage.

33 advantage over the defendant or for some other bad faith purpose.

The Townley test purports to weigh or balance the extent or

degree of the actual prejudice against the extent to which the

government’s “good faith reasons” for the delay deviate from what

the court believes to be appropriate. 1 6 However, what this test

seeks to do is to compare the incomparable. The items to be placed

on either side of the balance (imprecise in themselves) are wholly

different from each other and have no possible common denominator

that would allow determination of which “weighs” the most. Not

only is there no scale or conversion table to tell us whether

eighty percent of minimally adequate prosecutorial and

investigative staffing is outweighed by a low-medium amount of

actual prejudice, there are no reco gnized general standards or

principles to aid us in making that determination and virtually no

body of precedent or historic practice to look to for guidance.

Inevitably, then, a “length of the Chancellor’s foot” sort of

resolution wi ll ensue and judges will necessarily define due

process in each such weighing by their own “‘personal and private

notions’ of fairness,” contrary to the admonition of Lovasco

.

Apart from the above difficulty, grounding a due process

violation on the basis of good faith but inadequate, ineffective,

or insufficient governme ntal personnel or management leading to

preindictment delay runs counter to two basic constitutional

principles. In the first place, “[h]istorically, this guarantee of17 Crouch and Frye argue by analogy to the rule of B rady v.

Maryland

, 83 S.Ct. 1194 (1963), that a prosecutor’s suppression of

exculpatory evidence violates due process “irrespective of the good

faith or bad faith of the prosecution.” I d

. at 1196. B rady

—— which

relates to post-in dictment conduct by the prosecution

— — might be a

more cogent analogy if urged to support a contention that Sixth

Amendment speedy trial rights are violated by prosecutorial postindictment delay irrespective of the good faith or bad faith of the

prosecution. With arrest or indictment, a variety of

constitutional rights arise, as do more at trial itself. But, as

Marion and Lovasco make clear, the primary protection against undue

prearrest and p reindictment delay is the statute of limitations,

and the Due Process Clause has but a limited role to play in that

respect. There is no general common law or constitutional duty to

bring charges as soon as reasonably practicable, and it has long

been recognized that preindictment delay generally favors the

defense. S ee, e.g., United States v. Davis

, 487 F.2d 112, 119 (5th

Cir. 1973), cert. denied

, 94 S.Ct. 15 73 (1974) (“‘all practiced

trial lawyers are well aware that the attrition from such delay is

more damaging to the prosecution’s case than to that of the

defense. This will be so as long as the prosecution has the burden

of proof.’”). Hence, the rule of A rizona v. Youngblood

, 109 S.Ct.

333, 337 (1988), that “unless a criminal defendant can show bad

faith on the part of the police, failure to preserve potentially

useful evidence does not constitute a denial of due process,”

provides a more apt analogy than that of Brad y , as the Supreme

Court itself recognized in Youngblood by citing Marion and Lovasco

in support of its said holding.

34 due process has been applied to deliberate decisions of government

o fficials to deprive a person of life, liberty, or property,”

Daniels v. Williams

, 106 S.Ct. 662, 665 (1986), and hence “the Due

Process Clause . . . is not implicated by the lack of due care of

an official causing unintended injury to life, liberty or

property.” D avidson v. Cannon

, 106 S.Ct. 668, 670 (1 986). 1 7

Contrary to these principles, however, the Townley test would find

a due process violation where the government acted in good faith

and did not deliberately seek to prejudice the party ultimately

accused.

Finally, serious separation of powers concerns are implicated.1 8 Similarly, the Townley panel accepted that much of the delay

“was occasioned by the low priority assigned to this investigation

and to the overload of other investigative and prosecutive

responsibilities allocated to the available personnel,” Townley at

582, and also “because of changes of governmen t prosecuting

personnel.” I d

. at 581. The panel indicated that had the accused

not been only “somewhat” actually prejudiced

—— as it developed after

trial

—— these reasons would have been insufficient and a due process

violation would have occurred.

19 If all the manpower that could reasonably be expected has

been furnished and the highest reasonably appropriate priority has

been assigned to the matter in question, but a due process

violation has nevertheless been found despite the delay’s being

caused only by the insufficient manpower and the relative priority

assigned to the matter, then the due process violation must

necessarily rest on prejudice alone, contrary to Lovasco

.

35 Here, for example, the panel concluded that the reasons for the

delay

—— ”lack of manpower and the low priority which this

investigation was assigned”

— — were “insufficient to outweigh the

actual prejudice to Crouch and Frye.” Crouch at 483. 1 8 Finding

these reasons “insufficient” is in substance determining that

greater manpo wer s hould generally have been allocated to

investigation and prosecution in that jurisdiction, and that a

higher priori ty should have been assigned to this particular

investigation. 19 Yet those decisions are ones essentially committed

to the legislative and executive branches, and the case for

judicial second guessing is particularly weak where it is directed

at preindictment conduct and is supported not by any specific

consti tutional guaranty or by any long-established tradition of

judicial oversight, but only by the general contours of the due

process clause.

For example, the government has cited to us the following

observations in a report of the House Committee on Government2 0 See Pub. L. 101-73, Title IX, § 961(l)(1), Aug. 9, 1989, 103

Stat. 501; 18 U.S.C. § 3293.

2 1 2 Pulles, Whitlock, and Hogg FIRREA: A Legislative History

and Section-by-Section Analysis Title IX (McGraw-Hill 1993)

(quoting House Report 100-1088, October 18, 1988).

22 H.R. Rep. No. 101-982, 101st Cong., 2nd Sess. (1990).

36 Operations issued some ten months before FIRREA extended the

presently relevant limitations period to ten years, 20 viz :

“19. a. Pending bank fraud investigations are

overwhelming the Federal criminal justice system. There

are acute shortages of sufficiently compensated and

experienced prosecutors and investigators in most areas

of the nation to handle these more complex cases.

b. Timely investigations and/or prosecutions of many of

the 3,340 pending FBI investigations involving losses of

$100,000 or more is highly improbable, if not impossible,

without a substantial increase in the Justice

Department’s static budget.” 21

In response, Crouch’s brief cites, inter alia

, a 1990 report of the

same House Committee, 22 which he characterizes as having “found that

shortages of personnel for the investigation and prosecuti on of

such fraud and embezzlement (F&E) cases were the result of the

failure of the Executive Branch and the Department of Justice to

request sufficient finding and to assign appropriate priorities.”

Wha t are we to make of all this? Are we to say that there

would be no due process violation if the President had vigorously

and timely requested additional funds to investigate and prosecute

these cases, but Congress had refused? Or, that even so we will

find a due process violation beca use Congress shouldn’t have

refused? Of course, funds must come from somewhere. Are we to say

that such additional funding is better than increasing taxes or the2 3 Intentional delay for the purpose of gaining tactical

a dvantage would include delay for the purpose of renderin g

unavailable evidence favorable to the defense or which would tend

to undercut the government’s case. But, it would not include delay

to affirmatively strengthen the government’s case

—— su ch as delay

until a potential witness for the government becomes available by

reason of a plea bargain or the like

—— even to a level well beyond

that reasonably thought necessary to preclude the granting of a

post-verdict motion for judgment of acquittal under Fed. R. Crim.

P. 29(c) (and such a purpose would not be impermissible).

37 deficit or decreasing funding for some other programs? Are we to

judge whether financial institution fraud should be assigned a

higher priority than drug or other offenses? It seems to us that

all those decisions are quintessentially the business of either the

legislative or the executive branch, or both, rather than the

judiciary. Yet, a T ownley a pproach

— — so long as it actually tries

to “balance” or “weigh” instead of merely find a due process

violation on the basis of the extent of the prejudice

alone

—— inevitably involves us in grading or evaluating the merit of

resource allocation and management decisions that are properly the

province of the executive and/or legislative branches. Delay due

to su ch causes is fundamentally unlike intentional delay to gain

tactical advantage or for other improper purpose.

Accordingly, we rej ect the T ownley balancing test and hold

that for preindictment delay to violate the due process clause it

must not only cause the accused substantial, actual prejudice, but

the delay must also have been intenti onally undertaken by the

government for the purpose of gaining some tactical advantage over

the accused in the contemplated prosecution or for som e other

impermissible , bad faith purpose. 2 3 We need not now attempt to2 4 Neither Crouch nor Frye has alleged any specific such “other”

impermissible, bad faith purpose.

2 5 The magistrate judge, whose report the distric t court

approved and adopted as modified and supplemented by its opinion,

likewise found such presumptive prejudice. And the magistrate

judge and the district judge each also appears to have combined the

presumed prejudice with the actual prejudice found and then weighed

the total against the government’s reasons for the delay.

38 catalogue all possible “other” impermissible, bad faith purposes of

intentional delay, although Marion indic ates that a purpose “to

harass” the defendant would be included. I d

. at 466. 24 As

suggested by Marion and Lovasco

, we leave that to further case-bycase development.

We turn now to the prejudice component of the due process

claim.

Prejudice Requirement

General Principles

As noted, we agree with the panel’s holding, 51 F.2d at 483-

84, that the district court erred in concluding that the length of

preindictment delay established s ubstantial presumptive prejudice. 2 5

All our precedents, as well as a fair reading of M arion and

Lovasco , plainly indicate that actual, not presumptive, prejudice

must be shown where complaint is made of preindictment delay. S ee,

e.g., United States v. Wehling

, 676 F.2d 1053, 1059 (5th Cir.

1982); United States v. McGough

, 510 F.2d 598, 604 (5th Cir. 1975)

(“when preindictment delay is asserted, actual prejudice and not

merely the real possibility of prejudice inherent in any extended

delay is a necessary element which mu st be shown”); B utts at 977

(“[t]he mere passage of time [does] not constitut[e] the type of26 We explained in Beszborn :

“The law is well settled that it is actual

prejudice, not possible or presumed prejudice, which is

required to support a due process claim. The applicable

statute of limitations is the mechanism est ablished by

law to guard against possible, as distinguished from

actua l, prejudice resulting from the passage of time

between crime and the charge, protecting a defendant from

overly stale criminal charges. United States v. Ewell

, 383 U.S. 116, 86 S.Ct. 773, 15 L.Ed.2d 627 (1966); United

States v. Marion

, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d

468 (1971).

The concept of presumed prejudice has no place in a due process analysis, and the district court’s reliance

on Doggett is misplaced. D oggett was a case involving a

Sixth Amendment speedy trial violatio n claim, due to

post-indictment delay, rather than pre-indictment delay.

The proper measure of a claim of prejudice due to preindictment delay is the due process standard of the Fifth

Amendment, which requires a showing of actual prejudice.

. . .

The Supreme Court was clear in its directive that,

“There is no need to

. . . guard against mere possibility

that

. . . delays will prejudice the defense

. . . since

statutes of limitation already perform that function.”

United States v. Marion , 404 U.S. 307, 92 S.Ct. 455, 30

L.Ed.2d 468 (1971).” Id . at 66.

Moreover, preindictment delay generally tends to favor the defense,

not the prosecution. See, e.g., United States v. Davis , 487 F.2d

112, 119 (5th Cir. 1973), cert. denied , 94 S.Ct. 1573 (1974).

39 actual prejud ice necessary to set aside an indictment returned

within the appropriate statute of limitations”). The district

court’s reliance on the Supreme Court’s Doggett decis ion was

misplaced because Doggett was a Sixth Amendment pos t-indictment

delay case. See United States v. Beszborn, 21 F.3d 62 at 66 (5th

Cir.), cert. denied

, 115 S.Ct. 330 (1994). 26 See also, e.g., Byrd

at 1339; United States v. Bischel

, 6 1 F.3d 1429, 1436 (9th Cir.

1995).2 7 And, of course, loss of witnesses or documents occur ring

before delay becomes improper are not considered. S ee, e.g., Parks

at 868. C f. Walters v. Scott

, 21 F.3d 683, 688-89 (5th Cir. 1994).

40 The prejudice to be shown not only must be actual, rather than

presumed or potential, but must also be “substantial.” S ee, e.g.,

Marion at 465 (“substantial prejudice”); United States v. West

, 58

F.3d 133, 136 (5th Cir. 1995) (“actual and substantial prejudice”);

United States v. Royals

, 777 F.2d 1089, 1090 (5th Cir. 1985)

(“actual and substantial prejudice”); W ehling at 1059 (5th Cir

.

1982) (“‘substantial prejudice,’” quoting Marion ); United States v.

Willis

, 583 F .2d 203, 207 (5th Cir. 1978) (“substantial

prejudice”); Butts at 977 (“substantial prejudi ce”); B eckham at

1319 (“substantial actual prejudice”). Speculative prejudice does

n ot suffice, United States v. Parks

, 68 F.3d 860, 868 (5th Cir.

1995), and “[v]ague assertions of lost witnesses, faded memories,

or misplaced documents are insufficient.” B eszborn at 67. S ee

also West at 136; Royals at 1090; Wehling at 1059. A mere loss of

potential witness es is insufficient absent a showing that their

testimony “would have actually aided the defense.” B eszborn at 66.

See also West at 136; Royals at 1090; Wehling at 1059; U nited

St ates v. McGough , 510 F.2d 598, 604 (5th Cir. 1975) (“death of

some six potential defense witnesses,” some of whom the defendant

claimed “would have testified as to firsthand knowledge of several

of the transactions” involved). 27 Moreover, to establish prejudice

based on lost witnesses or documents, the defendant must also show

that “the informa tion . . . could not otherwise be obtained from

other sources.” B eszborn at 67. S ee also Royals at 109041

(“[D]efendant has failed to show that such evidence could not have

otherwise been obtained”).

That actual, substant ial prejudice

— — not merely possible or

potential prejudice

—— must be shown is also consistent with the

nature of the due process right in question. That right is one not

to be “deprived of life, liberty, or property, without due process

of law.” U.S. Const., Amend. 5. In the present context,

deprivation will normally occur only by conviction, and not simply

by tria l itself. C f. Olim v. Wakinekona

, 103 S.Ct. 1741, 1748

(1983) (“Process is not an end in itself. Its constitutional

purpose is to protect a substantive i nterest to which the

individual has a legitimate claim of entitlement”). In U nited

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 preindictment delay. We are aware of no

authority to the contrary. 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 o nly

after trial that that claim may fairly be assessed.’ I d

. at 1552 (emphasis added).

This, too, fully applies to claims of preindictment delay. The

denial of relief before trial in no way precludes the accused, if2 8 We observe that the Lovasco Cou r t, while reversing the

dismissal prior t o trial for preindictment delay, commented in a

footnote that the government contended “that the District Court

should have deferred action on the [defendant’s] motion to dismiss

[for preindictment delay] until after trial, at which time it could

have assessed any prejudice to the respondent [defendant] in light

of the events at trial.” Id . at 2048 n.7. The Court declined to

address the merits of this contention because it “was not raised in

the District Court or in the Court of Appeals.” Id

.

42 convicted, from success f ully demonstrating that the undue and

improper preindictment delay substantially and unfairly prejudiced

h is ability to avoid that result. Thus in M arion

, th e Court

reversed the pretrial dismissal f or preindictment 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.” I d

. at 466. 28 See also MacDonald

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 trial

—— when prejudice can better be gauged

—— would also be

denied”; emphasis added).

Necessarily, then, a far stronger showing is required to

establish the requisite actual, substantial prejudice pretrial than

would be required after trial and conviction. Indeed, it is

difficult to imagine how a pretrial showing of prejudice would not

in almost all cases be to some significant extent speculative and

potential rather than actual and substantial. We are aware of no

reported federal appellate decision since Lovasco that has

s ustained a pretrial dismissal for preindictment delay where the2 9 And, we are aware of only one such case prior to Lovasco , a

1 976 decision by a divided panel of the Eighth Circuit in U nited

Sta tes v. Barket , 530 F.2d 189 (8th Cir. 1976). Shortly after

Barket , another divided panel of the Eighth Circuit sustained the

pretrial dismissal of three counts of a four-count indictment on a

due process, preindictment delay basis, but was re versed by the

Supreme Court in Lovasco

.

3 0 Moreover, where the claim of preindictment delay is ruled on prior to trial, the defense, which will frequently be in the best

position to find or unearth exculpatory evidence allegedly lost due

to delay or evidence that may adequately replace or substitute for

it, has every incentive not to diligently search for or produce

such evidence. At trial, however, the incentive is just the

opposite. Then, if the evidence or some adequate substitute is not

produced, we can have far more confidence that it really could not

have been.

43 statute of limitations had not run. 29 This is not to say that a

motion to dismiss on such a basis should not be filed and initially

c onsidered prior to trial. C f

. Fed. R. Crim. P. 12(b)(1) & (2).

However, at least in all but the very clearest and most compelling

cases, the district court, rather than grant such a motion prior to

trial, should carry it with the case, and make the determination of

whether actual, s ubstantial prejudice resulted from the improper

delay in light of what actually transpired at trial. 30 A number of

reported decisions in this and other circuits reflect such a method

of proceeding. S ee, e.g., Townley at 581 (motion to dismiss

considered at pretrial hearing, district court reserved ruling and

subsequently denied motion after conclusion of the evidence; we

affirmed); United States v. Scott

, 579 F.2d 1013 (6th Cir. 1978)

(motion to dismiss two counts of three-count indictment denied

without prejudice prior to trial, granted after close of all the

evidence, jury acquittal on remaining count; affirmed). C f. United

States v. Glist

, 594 F.2d 1374 (10th Cir. 1979) (motions to dismiss3 1 Although it appears that in at least some of these cases the

motion was ruled on prior to verdict, normally the much better

practice will be to await the verdict rather than to

dismiss

—— particularly w here dismissal would be of an entire count

forming a substantial part of the indictment

—— preverdict. This will

allow t he government to appeal the dismissal in the event of a

guilty verdict (if the ve rdict is not guilty, the issue is moot)

and, should the dismissal be set aside on appeal, will obviate the

necessity of a new trial (which in any event m ight raise double

jeopardy concerns).

44 for preindictment delay taken under advisement prior to trial and

granted as to one of four counts afte r five days of trial;

affirmed). 31

Townley presents an instructive example of how a stro n g

pretrial showing of substantial prejudice may ultimately dissolve

in the unfolding of the actual tria l itself. Townley and his

partner Owens were charged with mail fraud in connection with

inducing persons to purchase an d invest in nonexistent vending

machines. T ownley at 582. Townley claimed that due to

preindictment delay he was unable to show that he had really

believed the machines would be produc ed and 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.” I d

. at 583. We found no such

substantial prejudice, howev er, b ecause “the main thrust of the

government’s case,” as presented at trial, “concerned [particular]

m isrepresentations made by Townley in the sale of the machines.”

Id

. Townley also claimed prejudice from being unable to adequately45

cor roborate 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 corrobo rate him. The government

further made full dis closure of its files to Townley’s

attorney to aid him in the preparation of the defense.”

Id . at 585-86 (citation omitted).

And, we observed that the government did not use but “had

ava ilable” a witness “who would have cast doubt on Townley’s

exculpatory testimony.” Id . at 586. We accordingly affirmed the

district court’s decision, after the close of all the evidence, to

deny Townley’s pretrial motion to dismiss for preindictment delay.

Similarly instructive is our opinion in McGough

, reversing the

district court’s pretrial dismissal on ac count of preindictment

delay. We described the defendant’s claim as follows:

“McGough’s assertion of actual prejudice to his

defense is based primarily upon the dea th of some six

potential defense witnesses. Some of these witnesses,

McGough claimed, would have testi fied as to firsthand

knowledge of several of the trans actions 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 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 for3 2 In Robinson

, the habeas petitioner claimed that the postindictment delay caused him to lose 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

tes timony would have had would be to have transformed Robinson’s

alibi from an incredibly tall tale to just a tall one.” R obinson

, 2 F.3d at 571. In R ice

, in rejecting a preindictment 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.

46 further findings in that respect, 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 ar e speculative and premature.” I d

. at 604-5. S ee also,

e.g., Robinson v. Whitley , 2 F.3d 562, 571 (5th Cir. 1993), cert.

denied

, 114 S.Ct. 1197 (1994); United States v. Rice

, 550 F.2d

1364, 1369 (5th Cir.), cert. denied , 98 S.Ct. 478, 479 (1994). 32

Prejudice in this case

At this stage of the proceedings, any claim that Crouch and

Frye will suffer actual and subst antial trial prejudice from the

preindictment delay

—— let alone be convicted

—— is purely speculative

and unsupported by the record. So far as actual prejudice is

concerned, there is simply no basis on which to conclude that this

case will not be another Townley

.

Crouch’s main claim is that the delay caused him to lose the

t estimony of six witnesses who had died prior to the July 1993

hearing before the magistrate judge, namely: his father, who died

i n June 1992; Gubert, who died at some unspecified time in 1988;47

Tschearner, an employee of Bankers, who died at a wholly

unspecified time before return of the indictment; Levy, a Bankers

outside director and chairman of its loan and executive committees

who also died at a wholly unspecified time before the indictment;

Carson, chairman of Vision Bank, who died in October 1992; and John

Connally, who died June 15, 1993.

As to Levy and Tschearner, so far as this record discloses,

they may well have died in 1987 or 1988, prior to any delay having

become even arguably undue, and hence their “loss” could not be

attributable to any improper delay. The same is true of Gubert,

who for all t his record shows may have died in January 1988.

Moreover, there was no adequate showing that these three

individuals could have contributed any testimony that was material

or related to matters that could not otherwise be established.

Levy was not claimed to have any knowledge at all of

—— much less any

participation in

—— any of the transactions at issue. He would simply

have testified how an outside director of a savings and loan

association typically functioned and relied on management. There

is no suggestion that similar testimony was not otherwise readily

available. Tschearner, as a Bankers’ employee, negotiated with

Ferguson concerning his purchase from Bankers of its REO tracts,

and, according to Crouch, would have testified that the only people

Ferguson mentioned to Tschearner as individuals at Delta with whom

Ferguson dealt were Gerjes and Erskine, and that Crouch was not

mentione d. But this is not necessarily contrary to the

government’s theory of the case, and there is nothing to suggest3 3 It was also asserted that Tschearner could testify as to the

then value of the Bankers REO tracts. However, there is no claim

that this information was not reasonably available from other

sources; nor can the a ctual significance of such testimony be

assessed on the basis of this record.

48 tha t Ferguson will give contrary testimony or will not, indeed,

c o nfirm Tschearner’s putative testimony that Ferguson did not

mention Crouch to Tschearner. Further, Tschearner is not shown to

have had any other knowledge of or connection with the transactions

at issue, and Fieselman, Bankers’ then president who signed on

behalf of Bankers all the papers for its signature in the

transactions in question, was alive and available to testify. 33 As

to Gubert, there was absolutely no showing or claim that he had any

knowledge of or participation in any of the transactions in

question. His putative testimony is essentially the same as that

of Crouch’s father, discussed bel ow, and is insufficient to show

prejudice for the same reasons.

Crouch’s father died in June 1992, and accordingly the loss of

his testimo ny

—— unlike that of Levy, Tschearner, and Gubert

— — is

doubtless fairly attributed to any delay here that may be found

undue and improper. However, Crouch does not claim that his

father

—— who was not sho wn to have been a Delta officer, employee,

or director at any of the times referenced in the indictment

—— ever

had any knowledge whatever of, or in any way participated in, any

of the charged transactions. Many of the matters Crouch says his

father could have testified to

—— such as that Crouch, though a Delta

direc tor and chairman of its board, was not a Delta officer or

employee and did not have an office on Delta premises, and that his3 4 These same observations apply equally to Crouch’s assertion

that his father would testify “I had to rely on what the officers

of the association told me.”

49 father had testified against Gerjes in the bonus case

—— appear to be

essentially undisputed as well as easily established by other

evidence. While Crouch states his father would testify that

“Gerjes misled my father, myself, other directors and shareholders

of Delta,” this is only of attenuated relevance at best, as it does

not concern any of the transactions at issue. Moreover, there is

no claim that similar testimony is not available from others of the

several Delta directors. 34 For example, this is what the FHLB

report of examination relates that Cholakian (who succeeded Gerjes

as president and had been a director since 1982) told the examiner,

and there is nothing to indicate Cholakian is not available to so

testify. Moreover, as noted, Gerjes, already convicted of taking

illegal “bonuses” on Delta loans, may well admit to some misleading

of Delta board members. We further observe that ample impeachment

of Gerjes is available, wholly apart from any testimony of Crouch’s

father, by showing Gerjes’ two prior convictions, his plea bargain,

his involuntary termination from Delta, and the fact that Crouch’s

father testified against him, and Crouch was prepared to, in his

1989 bonus case conviction.

Crouch’s fifth missing witness, Corson, had been chairman of

Vision Bank, an institution not claimed by anyone to have any

involvement whatever in the instant transactions. Nor does Crouch

claim that Corson had any kn owledge whatever of, or any

participation in, any of the inst ant transactions. Crouch50

apparently thought Corson could have testified to wholly unrelated

and unexplained Florida real estate transactions

— — occurring both

before and after the transactions here at issue

—— involving Ferguson

and Delta officer Erskine, to show “the type of per son” each of

them “is.” Such unrelated transactions are at best of the most

attenuated relevance. Moreover, Ferguson has already pled guilty

to offenses involving the instant transactions, so his willingness

to do that sort of thing is hardly inconsistent with the

government’s likely proof at trial. Nor is there any indication

that Ferguson would deny his involvement in the Florida

transactions, the nature of which is in any event wholly

unexplained. This is likewise the case as to Erskine; indeed,

there is no indication Erskine will likely testify.

Finally, Crouch claims John Connally, who died June 15, 1993,

after a brief illness, would have been a favorable witness. It is

unclear, however, that the loss of this witness is attributable to

preindictment delay. Crouch was aware he might well be indicted

about fifteen months before John Connally died, but apparently took

no steps to int erview him or the like. Moreover, the original

trial setting in this case was for a time several months before

June 15, 1993, and there is nothing to suggest John Connally would

have been unavailable at the earlier trial setting. Nor is there

any showing that his testimony would have been favorable. Crouch

said “I feel like” Connally would have testified he did not

consider himself or the Barnes-Connally partnership liable for the

Delta loans to Mark Connally beca use John Connally’s financial3 5 While Crouch’s briefs and argum ent suggest that minutes of

loan committee meetings are missing, such is not established by the

record. At the hearing, a documents custodian testified it would

probably take a search of about two weeks duration to determine if

those minutes could be located. Just what Crouch hoped to show by

those minutes is unclear, and there is certainly nothing to suggest

that Crouch will not be able to show that the minutes did not

reflect nominee loans.

51 statement of some six months after the loans closed did not list

them as liabilities. However, there is no showing that this

f inancial statement is unavailable. Nor is there any suggestion

that either Mark Connally or Ben Barnes or the government will

dispute that John Connally did not ever consider himself or his

partnership with Ben Barnes liable on the Delta loans to Mark

Connally. Indeed, the government represented at the hearing before

the magistrate judge that “the people from Austin who were involved

in this case were Ben Barnes and Mark Connally, not John Connally.”

There is no basis to assume, prior to trial, that the trial

evidence will show otherwise. At this stage it is simply

impossible to tell whether John Connally’s absence would

substantially prejudice the defense.

To the extent that Crouch may have lost any witnesses due to

improper delay, he has not shown any resulting actual, substantial

prejudice, and his claims of prejudice are essentially speculative

and premature . As to lost documentation, Crouch’s motion to

dismiss admits that “the Defendant cannot point to the loss of any

significant documents at this time.” And, there is no showing that

any of the loan documents or closing papers are missing. 35

F rye did not testify at the evidentiary hearing. Frye’s3 6 On cross examination she said she was unaware that after

March 1987 Frye was involved “in a countersuit” respecting a four

million dollar loan at Delta. The record indicates that that

matter was settled by the property Frye purchased (as alleged

nominee for Ferguson) being conveyed back to Delta.

37 Frye’s motion to dismiss for preindictment delay also

mentions five witnesses whom it asserts Frye is unable to locate,

but does not allege what they could have testified to; the motion

likewise alleges that Frye’s attorney at the time of the

transactions (one Higgs) is now unable to recall them. The motion

is not verified and no evidence supporting any of those allegations

was offered at the hearing before the magistrate judge.

52 former secretary, who came to work for him in March 1987, testified

that in September 1990, when he moved to a smaller office, she

threw away all his office files (except accounting files). Frye

had customarily made notes of telephone conversations and put them

in these files. She had never heard of Delta before Frye testified

at the grand jury on November 1992. 36 She did not know whether or

not the Frye office files thrown away in 1990 included any related

to the transactions involved in the indictment. When asked if she

knew whether Frye had any files at his house, she replied, “I don’t

think so, but I can’t say yes or no.” It appears that all the loan

documents, including closing statements and records showing

disbursements, are available, and Frye does not contend otherwise,

except in two particulars. 37

First, the loan documents include a Memorandum of Profit

Participation Agreement, executed by Ferguson C&D, Inc. and Frye’s

J.M.G. Corporation in recordable form, reflecting that Ferguson

C&D, Inc. had a profit participation in one of the Delta REO tracts

Frye purchased, but not specifying the parties’ respective3 8 There is no evidence as to whether or not this Memorandum (or

a duplicate of it) was actually recorded.

3 9 That Frye apparently paid his fee did not necessarily mean

he was representing Frye. Johnson did not know whether his then

firm had ever represented Frye.

53 per centages of profits. 3 8 Attorney Johnson testified that this

document, and certain other of the loan documents pertaining to

transactions between Frye and Ferguson (including a note and deed

of trust, in which Johnson was named trustee, and a letter from

Delta to Ferguson C&D, Inc.), appeared to have been prepared by

him, as they bore his typed initials and their format and style

were consistent with his usual drafting of such documents. Johnson

at the time the loans closed was with the Phillips, King, Smith &

Wright law firm, which he subsequently left in March 1989, and one

of the closing statements shows that firm’s fees were paid at

closing by Frye. Johnson testified he had no recollection of any

of th e transactions or of being at the closing, had never met or

known either Ferguson or Frye or Crouch, and did not know whom he

was representing in preparing the documents. 39 He stated that he

does not now have any file on any of these transactions, and does

not now recall whether he ever had such file. He never threw away

any files pertaining to Frye, Ferguson, or Delta. He had “no idea”

whether the fir m he was with at the time has any files on the

transactions in question. Attorney King

— — who had represented Frye

in the early stages of this prosecution and sat with him at the

hearing before the magistrate judge

—— was a partner in the same law

firm with Johnson at the time of the transactions in question, but4 0 While Johnson’s testimony suggests that the firm had

dissolved not long after he left in March 1989, he also stated that

he knew “they stored some files off campus.”

54 left the firm sometime before Johnson did. Johnson testified that

“ordinarily” a Profit Participation Agreement, specifying the

profit percentages of the parties, would accompany a Memorandum of

Profit Participation Agreement, but he had no independent

recollection of ever having prepared or seen a Profit Participation

Agreement as referred to in the Memorandum.

Frye argues tha t he has been prejudiced because the Profit

Participation Agreement itself has been lost, and it would indicate

that he was not a mere nominee for Ferguson. There are several

answers to this. In the first place, there is no direct evidence

that such an agreement ever existed; certainly there is no

testimony that it did. Conversely, there is nothing to indicate

that the government will take the position that there was no such

agreement, or that Ferguson will not admit that such an agreement

existed (or that Ferguson or Frye himself cannot testify to the

essential terms of the agreement). Indeed, there is no evidence

that such an agreement, if it ever existed, cannot be produced at

t rial. There is no evidence that Ferguson does not have the

agreement

—— or, indeed, that Frye does not

— — or that any effort had

been made to search the files of the law firm Johnson was with at

the time o f the transactions. 4 0 Finally, there is nothing to

suggest that the agreement itself would be substantially more

helpful to Frye t han the Memorandum. The crux of the point Frye

seeks to make

—— that he retained a continuing interest in the4 1 This contention is entirely based on FBI Agent Kettler’s

testimony as follows:

“Q. [Frye’s counsel] All right. Tell me whether or not

you have ever presented this document to the FBI for a handwriting analysis to determine whether Mike Frye was

or was not the author of this thing that purports to say

Abe Dunn.

A. No, we haven’t

Q. And tell the Court why you haven’t.

A. It’s a copy.

Q. And you can’t do a handwriting analysis not from a

copy?

A. Not very well.”

In response to Frye’s counsel’s further suggestion that “we

55 property with Ferguson

—— is made by the Memorandum itself. At this

stage, Frye’s claim of prejudice respecting the all eged Profit

Participation Agreement is essentially speculative.

Frye’s second claim of prejudice relates to the original of “a

waiver of notice of special meeting of directors” of Frye’s J.M.G.

Financial Corporation that was submitted in connection with the

application to Delta for the $3,950,000 loan to Frye and J.M.G. to

purchase Delta REO. The government had apparently been unable to

locate the original of the waiver of notice, but had a Xerox copy

of it as purportedly signed by attorney Dunn. It also appears that

Dunn had informed the authorities that he had not signed the

document and that his purported signature on it was not in fact

his. Frye asserts that the loss of the original is prejudicial

because handwriting analysis cannot be performed on a copy to show

that Frye did not forge Dunn’s signature. 4 1 This is assertedlycan’t even submit it for a handwriting analysis,” Kettler

responded:

“A. I’m not saying that. There may be some handwriting

analyses people that will work with copies, but our people in our laboratory prefer originals.

Q. And in fact, they won’t work with copies; right?

A. I do n’t know. I doubt it, but I don’t know for

sure. I don’t think they would.”

There was no evidence that any handwriting expert had ever

examined the copy or opined that no handwriting analysis could be

based on it.

4 2 Count 18 also alleged that the purpose of this “nominee loan”

was “to avoid loans to one borrower limitations.” As previously

indicated, the government’s theory of the case was that the real

borrower, for whom Frye was nominee, was Ferguson.

56 relevant to count 18, which charges Crouch and Frye with false

statements to Delta in connection with its $3,950,000 loan to Frye,

contrary to section 1014, because

“[t]he [loan] application and corporate minutes were materially false in that they purport to represent the

intent of the defendant Michael J. Frye that he and his

corporation be held liable for repayment of the debt,

when the defendants [Crouch and Frye] then and there well

knew that defendant Michael J. Frye w as 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 director’s

meeting was actually held.” 42

Again, Frye’s claims of prejudice in this connection are at this

stage speculative at best. To begin with, there is simply no

sufficient showing that a handw riting analysis could not be

performed, and indeed none had even been attempted (see note 41,

supra ). Moreover, there is absolutely nothing to indicate that the

government will make any attempt to prove that Frye forged Dunn’s

sign ature, or even that Dunn’s purported signature was not his.4 3 Frye’s motion points out that the failure of the board to

approve “could not, as a matter of law, have been raised as a

defense by the borrower corporation,” citing Texas Business

Corporation Act Art. 2.04(B). The government has never disputed

this, and has only argued that ruling should be deferred to trial.

4 4 With respect to Frye’ s possible loss of notes of telephone

conversations, Frye has referred to a memorandum by FHLB examiner

Mims of a conversation (whether by telephone is not clear) with

57 Indeed, evidence that Dunn’s signature on the notice was false is

neither necessary nor sufficient to prove that “no such directors’

meeting actually was held” as alleged in count 18. Finally, proof

that no director’s meeting was he ld is wholly unnecessary to

conviction on count 18, which in substance rests on the completely

unrelated “nominee” allegation, as does the government’s entire

theory of the case. We note in this connection that the government

has never taken the position that the loan papers were not

adequately worded and signed so as to bind Frye personally

, or that

they were not adequate to bind his corporation, whether or not the

directors’ meeting in question ac tually occurred. And, Frye has

pending in the district c ourt a motion to strike the count 18

directors’ meeting allegation on the grounds that it is immaterial,

and ruling thereon has been postponed until trial. 43 Even if there

were potential prejudice to Frye in this connection, it could be

entirely obviated by striking from count 18 the allegation as to

the directors’ meeting

— — which would leave the plainly main thrust

of that count wholly intact

—— and/or by excluding proof as to the

verity of Dunn’s signature on the notice. Dismissing the entire

indictment prior to trial is plainly uncalled for.

Frye’s other assertions of prejudice are equally unavailing. 44Frye on July 23, 1986. However, before the magistrate judge,

Frye’s c ounsel took the position that this memorandum did not

incriminate Frye, stating “.

. . it nowhere says that Mike Frye was

a nominee. It does say that Crouch and Ferguson put the whole deal

together and he [Frye] didn’t even have to go to Delta to sign the

loan papers, which is all true.” We have no assurance that Mims

will testify as to what was said in this conversation in any manner inconsistent with this characterization of it by Frye’s counsel.

Frye also introduced testimony by attorney Knoblock, who wrote

letters in June 1986, purportedly on behalf of J.M.G. Financial, to

Ferguson and Crouch. The letters were on the letterhead of another

attorney with whom Knoblock officed. Knoblock, on being shown the

letters, said he recognized the signature as his. He stated that

he had represented J.M.G. “just for a brief peri od of time in

1986.” He came to do so at the request of one Dan Croft, a selfemployed mortgage broker. He wrote the letters following a meeting

with Croft, and an attorney Knoblock did not know, who purported to

represent Ferguson , “and some other individual that was

representing J.M.G., I don’t recall the name.” He thinks Croft

told him to write the letters. It must n ot have been Frye, because

Knoblock testified he did not know Frye and had never met or seen

him prior to testifying at the hearing before the magistrate judge.

He did not know Crouch or who he was. He had met Ferguson. The

letter to Crouch, at Crouch’s law firm, concerned the Delta

$3,950,000 loan to J.M.G. and states, “It was the understanding and

information of JMG that this transaction was to facilitate a sale

from Delta to an undisclosed purchaser, being Mr. R.B. Ferguson.”

Knoblock disposed of all his J.M.G. files in 1991. However, there

is no evidence as to what those files might have contained.

Knoblock did testify that he could not say he ever saw a file

containing those letters. This testimony does not establish

prejudice to Frye. It rather suggests that the government may have

a difficult time tying Frye to the letters. How this will all play

out at trial cannot now be reliably ascertained.

58 Neither Frye nor Crouch has discharged the burden, especially

heavy prior to trial, of showing that at trial they almost

c ertainly will suffer substantial, actual prejudice by reason of

the claimed undue delay in the return of the indictment. No more

than potential, speculative prejudice is shown. To the extent that

the district court found otherwise, its findings are not supported

by the record and are clearly erroneous. While events at trial may

demonstrate actual and substantial prejudice, at present Frye’s and4 5 As noted, the district court correctly recognized t hat the

record “will not justify” any such finding of bad faith. However,

b ecause of discovery and evidentiary limitations imposed by the

magistrate judge, the district court declined to rule out

governmental bad faith.

59 Crouch’s claims are premature.

CONCLUSION

We summarize our holdings.

We reject the Townley balancing test and hold that where an

indictm ent is returned within the statute of limitations,

preindictment delay does not violate due process unless that delay,

in addition to prejudicing the accused, was intentionally brought

about by the government for the purpose of gaining some tactical

advantage over the accused in the contemplated prosecution or for

some other bad faith purpose. The district court having declined

to make any such finding of bad faith, 45 accord ingly erred in

granting the motion to dismiss t he indictment for preindictment

delay.

We further hold that preindictment delay does not entitle the

accused to dismissal of the indictment on due process grounds

unless he demonstrates that the improper delay caused actual,

substantial prejudice to his defense. The requisite prejudice may

not be presumed, rebuttably or otherwise, merely from the length of

the delay, and the district court erred in holding to the contrary

and in partially relying on presumed prejudice. Moreover, because

actual, substantial prejudice to the defense at trial is required,

a showing of mere potential or possible trial prejudice does not

suffice. This means that dismissal on such a basis p rior to trial4 6 The district court shall not grant the motion to dismiss

unless and until the events of trial demonstrate, and the court

finds, actual and substantial trial prejudice to the defense as the

result of improper and undue delay, and also finds, on the basis of

adequate additional evidence, that the delay was intentionally

brought about by the government for the purpose of gaining some

tactical advantage over the defendants or for some other bad faith

purpose.

60 will rarely (if ever) be appropriate. In all but the clearest and

most indisputable cases, the district court, even though inclined

to grant such a motion, should nevertheless normally withhold doing

so until after verdict, when the assessment of actual, substantial

trial prejudice can more accurately be made. Here the evidence is

wholly insufficient to sustain a fi nding that Crouch and Frye

will

—— not merely likely may

—— suffer actual and substantial prejudice

to their defense at trial

. To the extent the district court found

to the contrary, its findings are clearly erroneous. “Events of

the trial may demonstrate actual prejudice, but at the present time

appellees’ due process claims are speculative a n d premature.”

Marion at 466.

We accordingly reverse the district court’s order dismissing

the indictmen t and remand for further proceedings consistent

herewith. 46

REVERSED and REMANDED