UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 93-7719

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

versus

A. GUY CROUCH, III and

MICHAEL J. FRYE,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Texas

(April 20, 1995)

Before POLITZ, Chief Judge, GARWOOD and BENAVIDES, Circuit Judges.

POLITZ, Chief Judge:

The district court dis missed indictments against A. Guy

Crouch, III and Michael J. Frye which arose out of alleged illegal

banking activity. For the reasons assigned, we affirm.

Background

In March of 1986, while examining the records of Delta Savings

Association of Texas, a failed institution, federal investigators

discovered that the institution had been engaged in a "cash for1 Delta made lo ans to real estate investors conditioned on

their p urchase of property acquired by Delta primarily through

prior defaults. The "sale" of this property reduced Delta's

liabilities, lowered its required cash reserves, and artificially

i ncreased its net worth, thereby evading closer inquiry into its

operations.

2 trash" scheme. 1 Delta officials violated federal regulations which

prohibited excessive loans to one borrower by using bogus nominee

borrowers who bore no personal liability for the loans contracted.

Criminal referrals issued for Carl Gerjes, Delta's president,

Robert Ferguson, an involved real estate investor, Crouch, Delta's

attorney and chairman of its board of directors, and Frye who

allegedly acted through a corporate alter ego, JMG Financial, as a

nominee borrower for Ferguson. In 1986 the government began an

investigation into Delta's act i vities, focusing on Gerjes and

Ferguson, leading to the conviction of Gerjes in 1989 and his

guilty plea conviction on separate but related offenses in 1992, as

well as Ferguson's conviction in 1992. On November 12, 1992 a

19-count indictment was handed up against Crouch and Frye, charging

misapplicatio n of funds, 18 U.S.C. §§ 2, 657; false entries,

18 U.S.C. §§ 2, 1006; false statements, 18 U.S.C. §§ 2, 1014; and

bank fraud, 18 U.S.C. §§ 2, 1344.

Citing the eight-plus years between the alleged crimes in

1984-85 and the indictment, Crouch and Frye asserted prejudice from

the pre-indictment delay and moved for dismissal. A magistrate

judge recommended dismissal because of both presumptive and actual

prejudice caused by the passage of time. Following a d e novo

review the district court adopted the recommendation, holding that2 556 F.2d 1312 (5th Cir. 1 977), cert

. d enied

, 434 U.S. 1063

(1978).

3 665 F.2d 579 (5th Cir.), cert

. denied

, 456 U.S. 1010 (1982).

4 See United States v. Byrd

, 31 F.3d 1329 (5th Cir. 1 994);

United States v. Neal

, 27 F.3d 1035 (5th Cir.), cert

. denied

,

_____ U.S.

_____, 115 S.Ct. 1165 (1994); and United States v. Amuny

, 767

F.2d 1113 (5th Cir. 1985).

3 defendants had suffered presumptive prejudice because of the delay

and finding actual prejudice resulting from the delay due to the

u navailability of testimony because of death and memory loss and

the disappearance of exculpatory records. Applying the balancing

test dire cted in U nited States v. Brand 2 and in United States v.

Townley 3 for claimed violations of due process resulting from

pre-indictment delay, the court found that the govern ment's

assigned reason for delay, the lack of resources, did not outweigh

the prejudice suffered by Crouch and Frye. The court dismissed the

indictment; the government timely appealed.

Analysis

The government faults the district court's use of the Brand /

Townley balancing test. Even assuming Crouch and Frye were able to

show prejudice, the government contends tha t their inability to

demonstrate prose cutorial bad faith for the dilatory indictment

defeated their motion for dismissal. It cites post- T ownley

decisions for the proposition that to establish a due process

violation based on pre-indictment delay a defendant must show that

the prosecutor intentionally delayed the indictment to gain

tactical advantage. 45 404 U.S. 307 (1971).

6 404 U.S. at 322.

7 Id.

8 See

, e.g.

, United States v. Avalos

, 541 F.2d 1100 (5th Cir.

1976), cert

. denied , 430 U.S. 970 (1977); United States v. Butts

, 524 F.2d 975 (5th Cir. 1975).

Avalos

, however, noted a c aveat to use of a standard

requiring a showing of prosecutorial bad faith, stating:

4 In United States v. Marion 5 the Supreme Court held that

although the primary protection against undue delay prior to

a rrest, indictment, or information is the appropriate statute of

limitations, the due process clause of the fifth amendment offers

some protection from prejudice to a defendant's case arising from

this delay. The Court accepted, as an example, the government's

contention that if it be shown that the government had created the

prejudicial d elay as "an intentional device to gain tactical

advantage over the accused," 6 due process would require the

automatic dismissal of the indictment.

Following Marion we began the developm ent of a test for

violations of due process in this context. Despite the M arion

Court's express refusal to "determine when and in w hat

circumstances actual prejudice resulting from pre-accusation delays

requires the dismi ssal of the prosecution," 7 in dicta we used the

statement that a showing of prose cutorial bad faith required

automatic dismissal for the very different proposition that such a

showing was a sine qua non for the finding of a due process

violation. 8 Because the defendants in those cases were unable toThere is no Supreme Court authority squarely holding that

satisfaction of both elements of the test is necessary to

find a due process violation [and] there remains

substantial doubt whether, in a cas e in which actual

pre-accusat ion prejudice was overwhelming, the

government's purposeful delay would have to be shown; or, alternatively, where the government's misconduct was

blatant, whether the defendan t would still bear the

burden of showing actual prejudice.

541 F.2d at 1107 n.9.

9 431 U.S. 783 (1977).

10 Id. at 790.

11 Id. at 795.

12 Id. at 790 (citations omitted).

5 make a showing of prejudice due to delay, we did not apply this

statement in a dispositive ruling.

The Supreme Court next considered this issue in United States

v. Lovasco

, 9 stating th at proof of prejudice was "a necessary but

not sufficient element of a due process claim, and that the due

process inquiry must consider the reasons for the delay as well as

the prejudice to the accused," 10 including the inquiry whether the

delayed prosecution violates "elementary standards of fair play and

decency" 11 and "fundamental conceptions of justice which lie at the

base of our civil and political instit utions." 1 2 After balancing

the prejudice caused by an 18-month delay against the government's

reason for delay

-- its continui ng investigation -- the L ovasco

Court upheld dismissal of the indictment.

The Lovasco Court also noted that following Marion neither it

nor any lower appellate court had "had a sustained opportunity to

consider the constitutional significance of various re asons for13 Id. at 797.

14 Id.

15 556 F.2d at 1317 n.7.

16 665 F.2d at 582 (citations omitted) (emphasis added).

6 delay." 13 Instead of passing upon this issue, the Court opted to

leave such rulings to future decisions of the lower courts applying

"the [aforementioned] settled principles of due process." 14

In Brand

, one of our first cases applying the teaching of

Lovasco

, after noting that actual prejudice must be shown as a

threshold matter, we stated that L ovasco did "not indicate tha t

governmental interests not amounting to an intentional tactical

delay will automatically justify" 1 5 such prejudice. Rather, we

concluded that Lovasco st ood for balancing the government's need

for the delay against the actual prejudice suffered by the

defendant.

We next addressed the issue in T ownley and crystallized the

test for due process violations thusly:

[T]he accused bears the burden of proving the prejudice

and, if the threshold requirement of actual prejudice is

not met, the inquiry ends there. Once actual prejudice

is shown, it is necessary to enga ge in a sensitive

balancing of the government's need for an investigative

delay again st the prejudice asserted by the defendant.

The inq uiry turns on whether the prosecution's actions

violated fundamental conceptions of justice or the

community's sense of fair play and decency. Inherent in

the adoption of a balancing process is the notion that

particular reasons are to be weighed against the

particular prejudice suffered on a case-by-case basis.

. . . [D]ue process . . . turns upon whether the degree

of prejudice thereby sustained by the accused is

sufficiently balanced by the good-faith reasons advanced

by the government

. 1617 Id.

1 8 United States v. Wehling

, 676 F.2d 1053 (5th Cir. 1982). S ee

also

, e.g.

, Amuny ; Byrd ; Neal ; and United States v. Beszborn

, 21

F.3d 62 (5th Cir.), cert

. denied , _____ U.S. _____, 115 S.Ct. 330

(1994).

1 9 Burlington Northern Railroad Co. v. Brotherhood of

Maintenance Way Employees , 961 F.2d 86, 89 (5th Cir. 1992), cert

. d enied , _____ U.S. _____, 113 S.Ct. 1028 (1993) (citations

omitted).

7 The Townley court left no doubt that a showing of bad faith by the

government was not a requisite for a due process violation. We

noted:

[T]he Lovasco balancing test wou ld be reduced to mere

words if indeed the government's 41-month delay in

bringing the indictment were excusable, whatever the

prejudice caused the defendant, simply by a showing that

the government was negligent, however gro ssly, and not

bad-intentioned. 17

Several subsequent decisions overlooked Townley 's holding and

relied on the dicta from pre- Lovasco cases for stating that

pre-indictment delay may result in dismissal of an indictment only

when the delay re sulted from an ill-intentioned act by the

government. 18 In accordance with our long-established rule, we are

bound to follow the earliest dispositive articulation of a rule as

the decision of one "panel may not overrule the decision, right or

wrong, of a prior panel in the absence of en banc reconsideration

or superseding decision of the Supreme Court." 19 We therefore must

apply t he Brand / Townley balancing test as the binding precedent.

The district court correctly relied upon the holdings of Brand and

Townley in its evaluation of the merits of defendants' motion to

dismiss.20 _____ U.S. _____, 112 S.Ct. 2686 (1992).

21 Byrd , 31 F.3d at 1339 (emphasis in original); Marion

.

2 2 United States v. McGough , 510 F.2d 598, 604 (5th Cir. 1975)

(emphasis added) (citations omitted). Accord

, Butts at 977 ("The

mere passage of time [does] not constitut[e] the type of actual

prejudice necessary to set aside an indictment returned within the

appropriate statute of limitations.

. . ."); United States v. West

, 568 F.2d 365, 367 (5th Cir.), cert

. denied , 436 U.S. 958 (1978)

("[I]t is readily inferable from the decisions of this court that

the defen dants generally bear the burden of establishing actual

prejudice.").

23 Byrd ; Neal ; Beszborn ; Amuny

.

8 We find merit in one part of the government's challenge to the

district court's ruling, specifically its holding that the passage

of approximate ly eight years from the alleged commission of the

crime s to the issuance of the indictment was presumptively

prejudicial. As authority the trial court cited United States v.

Doggett

, 20 which involved post -indictment delay, as support for the

existence of presumptive prejudice i n this p re -indictment delay

case. We find this reliance misplaced as " p re -indictment delay

does not raise a Sixth Amendment issue, but is instead examined

under the due process clause of the Fifth Amendment." 21

Our precedents require that the trigge ring prejudice be

actual, not presumptive. Twenty years ago we stated that

when pre-indictment delay is asserted, actual prejudice

and not merely the real possibility of prejudice inherent

in any extended delay is a necessary element which must

be shown before the restraints of the due process clause

will be applied to bar a prosecution because of a

delay. 22

Townley

and subsequent decisions 2 3 recognized that the defendant

must show proof of actual prejudice as a threshold requirement.24 Beszborn , 21 F.3d at 66.

2 5 Further, the record indicates that because of Crouch's

cooperation against Gerjes, there is the likelihood of the latter's

animosity.

9 The district court's conclusion that there was presumptive

prejudice from the mere passage of time was incorrect.

The court a` quo also based its decision, however, upon its

finding of actual prejudice, focusing upon Crouc h's loss of

testimony due to the deat hs of several potential witnesses, and

upon Frye's claim that critical and exculpatory documentary

evidence was missing. The government challenges this finding,

contending that the defendants' claim of prejudice consists only of

vague assertions of lost witnesses, faded memories, or misplaced

documents.

Findings of actual prejudice are revi ewed under the clear

error standard. 24 We find no such error present. The record

supports the finding of prejudice due to the above factors,

reflecting that Crouch established exactly which witnesses were

lost and how the lost witnesses were crucial to rebut the

credibility and character of Gerjes and Ferguson, potentially the

government's star witnesses. 25 These potential witnesses included

his father, A. Guy Crouch, Jr ., who, as a former board president

and major stockholder of Delta, would have testified in support of

Crouch's claim that Gerjes had misled the board and other Delta

officers about his unauthorized operations. Other corroborating

witnesses included Tranquillo Gubert, another director, and Larry

Tscherner, former vice pres ident of an entity involved in the26 Crouch bases his failure to retain records in part upon his

receipt, on at least three separate occasions, of assurances from

the government that he was not a target of any investigation.

10 scheme, who would have testified about their dealings with Gerjes

and Ferguson. As Gerjes and Ferguson likely would be cooperating

with the government in its prosecution of Crouch and Frye, the lost

testimony would also be crucial f or rebuttal and impeachment

purposes.

The record also contains referenc es to lost exculpatory

documentary evidence, including a lost "Profit Participation

Agreement" between Frye and Ferguson's corporations that allegedly

would have shown Frye's intent to work with Ferguson in developing

the land purchased, rebutting claims that Frye was not materially

involved with the loan and land purcha se. Further, the

authenticity of a copy of a document constituting evidence of an

overt act of the conspiracy poses a material issue. The government

claims that Frye forged signatures to a waiver of notice form that

allegedly facilitated his purchase of the "trash" real estate. The

record establishes that only an original copy can be examined for

authenticity and, as the original cannot be found, there is now no

me thod by which Frye can show that the signatures on the waiver

were authentic. The record also reflects that both Frye and Crouch

had lost, either through routine disposal or surrender to

authorities, 26 personal records that could have assisted in

rebutting proof of their guilt. Some of these lost documents were

irreplaceable; this fact, when combined with both expert evidence

validating the def endants' claim of memory loss and the27 665 F.2d at 586.

2 8 Although the actual d elay was longer (by about 18 months),

the period of the investigation is not considered. S ee Lovasco

,

supra

.

11 aforementioned lost exculpatory testimony, amply supports the

court's finding that Crouch a nd Frye suffered significant actual

prejudice.

Consistent with Townley 's holding, after finding actual

prejudice from pre-indictment delay, the court must weigh the

actual prejudice suffered against the reasons for the delay. The

record reflects that the government had knowledge of Crouch's and

Frye's involvement dating, at the very latest, from its August 1986

receipt of the criminal referrals, but di d not initiate an

investigation until, at the very earliest, May of 1991. The

reasons for the long delay in launching the investigation were,

essentially, lack of manp ower and the low priority which this

investigation was assigned. Although "prosecutorial overload and

insufficient personnel[] might be entitled to slight weight in the

balance of due pr ocess considerations," 2 7 this slight weight is

insufficient to outwe igh the actual prejudice to Crouch and Frye

caused by the lengthy pre-indictment delay. 28 Under the

circumstances presented by this particular case, we conclude that

requiring Crouch and Frye to stand trial now would be fundamentally

unfair and violative of due process.

The judgment of the district court dismissing the indictment

is AFFIRMED.29 Other post- Lovasco published opinions of this Court so

holding or stating include: United States v. Neal , 27 F.3d 1035,

1041 (5th Cir.), cert. denied

, 115 S.Ct. 1165 (1994); United States

v. Beszborn

, 21 F.3d 62, 65-66 (5th Cir.), cert. denied

, 115 S.Ct.

330 (1994); United States v. Hooten , 933 F.2d 293, 296 (5th Cir. GARWOOD, Circuit Judge, dissenting:

I respectfully dissent.

My first concern is that the majority departs from the

overwhelming weight of precedent in this Circuit by holding that,

where limitations have not run, a defendant may nevertheless

prevail on a due process claim of pre-indictment delay even though

the government did not intentionally delay the indictment to gain

tactical advantage or for other impermissible purpose, and the

delay arose o nly because of the lack of manpower and the low

priority assigned the investigation. A less than exhaustive review

of this Court's published opinions since United States v. Lovasco

,

97 S.Ct. 2044 (1977), reflects that at least twenty-nine different

judges of this Court SQ twenty-five of the thirty-two individuals who

have ever served as an active or senior judge of this Court since

it split October 1, 1981 SQ hav e authored, or joined without

reservation, unanimous opinio ns in some eighteen different cases

h olding or stating in substance that "[t]o prove that p reindictment delay violated his due process rights, a defendant must

demonstrate that the prosecutor intentionally delayed the

indictment to gain a tactical advantage and that the defendant

incurred substantial prejudice as a result of the delay." United

States v. Byrd , 31 F.3d 1329, 1339 (5th Cir. 1994). 291991); Dickerson v. Guste

, 932 F.2d 1142, 1144 (5th Cir.), cert.

denied

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

, 912 F.2d

766, 769 (5th Cir. 1990); United States v. Varca

, 896 F.2d 900, 904

(5th Cir.), cert. denied

, 111 S.Ct. 209 (1990); United States v.

Carlock

, 806 F.2d 535, 549 (5th Cir. 1986), cert. denied

, 107 S.Ct.

1161 (1987); United States v. Johnson

, 802 F.2d 833, 835, 836 (5th

Cir. 1986); United States v. Scott , 795 F.2d 1245, 1249 (5th Cir.

1986); United States v. Ballard

, 779 F.2d 287, 293 (5th Cir.),

cert. denied

, 106 S.Ct. 1518 (1986); United States v. Amuny

, 767

F.2d 1113, 1119-1120 (5th Cir. 1985); United States v. Wheling

, 676

F.2d 1053, 1059 (5th Cir. 1982); United States v. Hendricks

, 661

F.2d 38, 39-40 (5th Cir. 1981); United States v. Nixon , 634 F.2d

306, 310 (5th Cir. 1981); United States v. Durnin , 632 F.2d 1297,

1299-1300 (5th Cir. 1980); United States v. Ramos , 586 F.2d 1078,

1079 (5th Cir. 1978); United States v. Willis

, 583 F. 2d 203, 207

(5th Cir. 1978).

30 Burlington Northern Railroad Co. v. Brotherhood of

Maintenance Way Employees , 961 F.2d 86, 89 (5th Cir. 1992), cert.

denied , 113 S.Ct. 1028 (1993) (citations omitted).

13 Citing our acknowledged rule that "one panel may not overrule

the decision, right or wrong, of a prior panel in the absence of en

banc re consideration or superseding decision of the Supreme

Court," 30 the majority justifies its departure from the foregoing

mass of Fifth Circuit precedent by reliance on United States v.

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

(1978), and United States v. Townley

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

cert. denied

, 102 S.Ct. 2305 (1982). Laying aside the thought that

we may have had the functional equivalent of en banc establishment

of the rule most recently stated and applied in Byrd

, it is in any

e vent clear to me that Brand and Townley cannot bear the w eight

assigned them.

As to B rand

, its statements that intentional delay for

tactical advantage need not be shown and that instead the reasons

for the delay should be balanced against the resulting prejudice,31 As the majority infer entially recognizes, dicta by one

panel does not bind a subsequent panel. S ee Matter o f Dyke , 943

F.2d 1435, 1445 & n.28 (5th Cir. 1991); Nicor Supply Ships

Associates v. General Motors

, 876 F.2d 501, 506 (5th Cir. 1989).

As a practical matter, such a principle is necessary to the

effective functioning of a large multi-panel court such as the

Fifth Circuit.

14 556 F.2d at 1 317 n.7, are plainly dicta. 3 1 B rand rejected the

defendant's pre-indictment delay claim because he had not

demonstrated any prejudice S Q a n admitted requirement for relief

irrespective of the reasons for the delay. Id . at 1316-1317. At

the end of the prejudice discussion in the text SQ which never even

adverts to wh ether a further showing beyond prejudice is

required SQ footnot e 7 is called for. It is only in this footnote

that the language relied on by the majority appears. However, by

this stage the Brand court had already determined to deny relief

because of the absence of prejudice. Moreover, nothing in footnote

7 of Brand SQ

or in its text SQ identifies the reason for the delay or

purports to characterize the reason as either being or not being

intentional for tactical advantage, or negligent, or otherwise

improper or insufficient. Nor does anything in B rand SQ in its text

or its footnotes SQ pu rport to balance the reason for the delay

against the prejudice to the defendant (which, of course, it could

not, as it had already concluded there was no prejudice). Brand

did not apply a balancing test, and the affirmance in Brand cannot

be said to rest, even alternatively, on its general statement in

footnote 7 that a defendant need not show intentional tactical

delay by the prosecution. Thus, Brand 's footnote 7 forms no part

of its ratio decidendi , and is purely dicta.32 As di scussed in the text below, it is also significant

that in Townley

we reviewed (and affirmed) a conviction following

trial, while here we review a pre -trial dismissal.

15 Townley

SQ a quorum decision by two judges SQ may well be a holding

rather than simply dicta. In Townley we concluded that there was

no evidence that the delay was due to "bad faith motive to

prejudice" the defendant. 665 F.2d at 581. Under the rationale of

Byrd and its predecessors, that alone would hav e justified

affirmance, even though we concluded that "the lengthy preindictment delay somewhat prejudiced Townley." I d. a t 586.

However, we proceeded to actually balance the extent of the

prejudice against the reasons for the delay, stating that such a

balancing could show a due process violation from pre-indictment

delay even though there was no "intentional tac tical delay or

harassment on the part of the government." I d

. at 582. We

ultimately concluded that the way the trial actually unfolded, and

particularly the way the government sought to prove its case, was

such that the prejudice to Townley was not sufficiently

substantial, when balanced against the reasons for the delay ("the

press of other investigations

. . . low-priority accorded to the

present investigations and

. . . chan ges of governmental

p rosecuting personnel," i d

. at 581), as to amount to a denial of

due process. 32

Assuming, then, that Townley is holding, not dicta, it is

never theless not binding because it conflicts with our earlier

holding in United States v. Durnin

, 632 F.2d 1297 (5th Cir. 1980).

In Durnin

, we rejected a due process claim of pre-indictment delay33 I note in passing that the Fifth Circuit does not stand

alone in its holdings that to sustain a due process claim of preindic tment delay the defendant must show "not only substantial

prejudice

. . . but also a motive on the part of the prosecutor to

use the delay to gain a tactical advantage." Durnin at 1299. In

Uni ted States v. Sowa , 34 F.3d 447, 450 (7th Cir. 1994), the

Seventh Circuit stated,

"To estab lish that a pre-indictment delay violated due

process, [defendant] Sowa must prove that the delay

caused actual and substantial prejudice to his fair trial

rights, and there must be a showing that the government

16 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

Cl ause in this context, appellant m ust show

, not only

substantial prejudice flowing from an inordinate delay,

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

the delay to gain a tactical advantage

. . . . [citations]

Appellant does not contend that the government sought to

delay his indictmen t for tactical advantage, and the

district court specifically found that the delay resulted

from the government's good-faith attempt to ascertain

appellant's guilt beyond a reasonable doubt. Since this

finding is abundantly supported b y the record, the

district court's ruling on the motion to dismiss must be

affirme d." I d

. at 1299-1300 (citations and footnote

omitted; emphasis added).

There is no reasonable basis upon which Townley can be

characterized as holding while at the same time treating Durnin as

dicta. D urnin is thus the controlling precedent. The overwhelming

weight of authority in this Circuit is to the same effect. S ee

note 1, supra, and accompanying text. Accordingly, I am unable to

agree to the majority's application of a contrary rule. 33delayed indictment to gain a tactical advantage or some

other impermissible reason . . . . Sowa's claim . . .

fails to meet the requirements of the second prong. . .

. [D]ue process is only implicated if the government

purposely delayed the indictment to take advantage,

tactically, of the prejudice or other wise acted in bad

faith."

The Second Circuit stated the same rule in U nited States v. Hoo

, 825 F.2d 667, 671 (2d Cir. 1987), cert. denied

, 1 08 S.Ct. 742

(1988). In his dissent from the denial of certiorari in Hoo

, Justice White observed that the First, Third, Tenth, and Eleventh

Circuits, in addition to the Second, "have simil arly required a

showing of prosecutorial misconduct designed to obtain a tactical

advantage over the defendant or to advance some other impermissible

purpose i n order to establish a due process violation." H oo v.

United States , 108 S.Ct. 742 (1988) (White, J., dissenting from

denial of certiorari ). Justice White identified the Fourth and

Ninth Circuits as applying a balancing test. Id.

17 My second concern is that here the entire indictment as to

Crouch and Frye has been dismissed prior to trial. It seems to me

that only the very clearest showing of virtually certain

substantial actual trial prejudice should justify such a pretrial

dismissal . In my view, this high standard of proof has not been

met here.

I begin by noting that the right here asserted is the right to

avoid an unfair conviction, not the right to be free of a trial

which will likely be unfair. In 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 pre-3 4 Even statutes of limitation have been held not to create

a right not to be tried. See United States v. Weiss , 7 F.3d 1088

(2d Cir. 1993). Although pre-trial dismissals on limitations

grounds are not uncommon, that is because the date of the offense

appears on the face of the indictment and the question is a purely

legal one; the reasons for the delay in indictment and whether it

is prejudicial are generally irrelevant to the limitations issue.

18 indictment delay. 34 The Supreme Court further stated in M acDonald :

"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 cri me charged. Normally, it is o nly

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

. at 1552 (emphasis added).

Again, this fully applies to claims of pre-indictment delay. The

denial of relief before trial in no way precludes the accused, if

convicted, from successfully demonstratin g that the undue and

improper pre-indictment delay substantially and unfairly prejudiced

his ability to avoid that result. Thus in U nited States v. Marion

,

92 S.Ct. 455, 466 (1971), the Supreme Court reversed the pretrial

dismissal for pre-indictment delay, but observed that "[e]vents of

the trial may demonstrate actual prejudice, but at the present time

appellees' due process claims are speculative and premature." S ee

also McDonald , 98 S.Ct. at 1552 ("The denial of a pretrial motion

to dismiss an indictment on speedy trial grounds does not indicate

that a like motion made after trial SQ when prejudice can better be

gauged SQ

would also be denied.").

These realities, it seems to me, dictate the conclusion that

a far stronger showing should be required to sustain a claim of due

process pre-indictment delay prior to trial than would be required3 5 Shortly after Barket

, another divided panel of the Eighth

Circuit again sustained the pretrial dismissal of three counts of

a four-count indictment on a due process, pre-indictment delay

basis. U

nited States v. Lovasco

, 532 F.2d 59 (8th Cir. 1976).

However, the Supreme Court reversed. U nited States v. Lovasco

, 97

S.Ct. 2044 (1977).

19 after trial and conviction. I believe that experience bears this

out. So far as I am aware, there is only one reported federal

appellate deci sion sustaining such a pretrial dismissal, a 1976

decision by a divided panel of the Eighth Circuit. United States

v. Barket

, 530 F.2d 189 (8th Cir. 1976). There are n o such

decisions since Lovasco

. 35 This silence speaks volumes.

Townley provides a compelling example of how a strong pretrial

showing of substantial prejudice may ultimately dissolve in the

context of the actual trial itself. There, the defendant Townley

and his partner Owens were charged with mail fraud in connection

with inducing persons to purchase and invest in nonexistent vending

machines. Townley, 665 F.2d at 582. Townley claimed that due to

pre-indictment delay he was unable to show that he really believed

the machines would be produced and would be a valuable investment

for the purchasers. We concluded that the requisite substantial

prejudice would have been shown "had the thrust of the government's

case" as presented at trial "been that Townley well knew that he

an d Owens could not deliver the machine sold or that the scheme

could not be successful." Id . at 583. We found no such

substantial p rejudice, however, b ecause "the main thrust of the

government's case," as presented at trial, "concerned [particular]

misrepresentations made by Townley in the sal e of the machines."3 6 We even observed that the government did not use but "had

available" a witness "who would have cast doubt on Townley's

exculpatory testimony." Id . at 586.

20 Id

. Townley also claimed prejudice from being unable to adequately

corroborate his testimony that, as soon as he discovered Owens'

fraud, he took action to protect the investors. We rejected this

based on the approach taken by the government at trial:

"Insofar as counsel was unable to corroborate

Townley's testimony that (after he had discovered Owens'

fraud) he had informed the financing company not to

approve any further applications for credit by investorpurchasers, 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 customerwitnesses whose testimony tended to corroborate him. The

government further made full disclosure of its files to

Townley's attorney to aid him in the preparation of the

defense." Id . at 585-86 (citation omitted). 36

Another instructive decision of ours in this respect is United

States v. McG ough , 510 F.2d 598 (5th Cir. 1975). There, we

reversed a pretrial dismissal order based on a due process claim of

pre-indictment delay. We described the claim as follows:

"McGough's assertion of actual prejudice to his defense

is based primarily upon the death of some six potential

defense witnesses. Some of these witnesses, McGough claimed,

would have testified as to firsthand knowledge of several of

the transactions which entered into the government's

calculation of the amount understated; the testimony of others

might impeach government witnesses.

. . . [T]he government

asserted at the hearings that it had expected two of them to

be government witnesses, rather than witn esses for the

defense." Id . at 604.

Although we observed that we could "find no indication that the

trial court weighed the contradictory factual assertions before

stating that there was actual prejudice," id

. at 604, we

nevertheless did not remand for further findings in that respect,3 7 In Robinson

, the habeas petitioner claimed that the postindictment delay prejudiced him because he lost two witnesses, one having died and the other no longer locatable, who "would have

corroborated the 'alibi' he presented at trial." We rejected this

claim, stating, "By the trial's end, however, the prosecution had

managed to blow so many holes in Robinson's alibi that the only

effect their testimony would have had would be to have transformed

Robinson's alibi from an incredibly tall tale to just a tall one."

Robinson , 2 F.3d at 571.

38 In Rice

, in r ejecting a pre-indictment delay claim, we

observed, concerning the defendant's claim (pretrial) that the

delay had allowed the government to procure evidence against him,

that at trial "[n]o such later acquired evidence was ever offered

against any of the defendants." Rice , 550 F.2d at 1369.

21 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

pre sent time appellees' due process claims are speculative and

premature.'" Id. at 604-5. So it is here. See also, e.g.,

Robinson v. Whitley

, 2 F.3d 562, 571 (5th Cir. 1993), cert. denied

,

114 S.Ct. 1197 (1994); 37 United States v. Rice

, 550 F.2d 1364, 1369

(5th Cir.), cert. denied , 114 S.Ct. 1197 (1994). 38

Evaluati on of a due process claim of pre-indictment delay

after trial not only benefits from sure knowledge of how (to say

nothing of whether) the government proved its case, but also from

knowl edge of what the defense is able to produce. It is settled

that, to sustain a claim of substantial prejudice based on lost

evidence or witnesses, the de fendant must show that "the

information

. . . could not otherwise be obtained from other

sources." U

nited Sta tes v. Beszborn , 21 F.3d 62, 67 (5th Cir.),

cert. denied

, 115 S.Ct. 330 (1994) (reversing pretrial di smissal

based on due process claim of pre-indictment delay). S ee also39 Furth ermore, a defendant claiming pre-indictment delay

must show tha t any claimed prejudice is attributable to that

portion of the delay that is undue

. Cf. Walter v. Scott , 21 F.3d

22 United States v. Royals

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

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

otherwise been obtained."). Where the due process claim of preindictment delay is ruled on pretrial, the defense, which

frequently will be in a much better position to know of or unearth

such "replacement" defensive evidence, has every incentive not to

diligently look f or or come forward with it. At trial, however,

the incentive is precisely the opposite. T hen

, if the evidence is

not produced, we can have much more confidence that it could not

have been.

There is no way to know that this case will not be a Townley

.

At this stage, any claim that Cr ouch and Frye will be convicted

bec a use of substantial prejudice from pre-indictment delay is

purely speculative. For example, Crouch claims that the delay

deprived him of the testimony of his father, who died in June 1992,

the indictment having been return ed in November 1992, and of

Tranquillo Gubert, who died i n September 1988, both former

directors of Delta Savings Association. But Crouch does not claim

that either of these individuals knew anything of the charged

transactions, only that they would have testified tha t Gerjes,

Delta's president, was in charge of Delta and often misled the

board and Crouch. Such testimony is of only attenuated relevance

to the charged transactions, and there is no showing that other

board members were not available to supply this evidence. 39 As to683, 688-89 (5th Cir. 1994) (evidence lost before delay became

excessive not lost due to excessive del ay). Here, there is no

basis for finding that, at the time of Gubert's death in 1988, the

pre-indictment delay had become undue delay.

40 The presently relevant part of count 18 is as follows:

"C. The said false and fraudulent statements were

contained in the purporte d application for the loan in

the name of defendant M ICHAEL J. FRYE ' s corporation,

J.M.G. Financial Corporation, and accompanying purported

minutes of a meeting of the directors of the defendant's

corporation authorizing the defendant to purchase DELTA

REO o n behalf of the corporation, and were intended by

the defendant to be included in the loan file of the

sham, nominee loan in order to enable the making of the

loan in connection with a 'cash for trash' transaction,

to avoid loans to one borrower limitations and to avoid

detection by DELTA officials and regulatory examiners of

23 Larry Tschearner, an officer of another involved entity, who died

at an unspecified time before the return of the indictment, the

c laim that he could have impeached expected government witnesses

Gerjes and Ferguson is plainly a speculative basis on which to find

prejudice pretrial.

Frye's claim respecting the lost "Profit Participation

Agreement" is deficient because there is no showing that it

contained helpful, mat erial evidence not reflected in the

"Memorandum" thereof, which likewise tends to show Frye's intent to

work with Ferguson in developing the land. As to the original

waiver of notice form, Frye claims that the original is necessary

to prove there was no forgery. But this presupposes the government

will produce evidence that there was a fo rgery. This relates to

count 18 of the indictment, which alleged false statements to Delta

in connection with a loan application, contrary to 18 U.S.C. §§

1014 and 2. 40 It is apparent that a conviction on count 18 can bethe nature of the nominee loan.

D. The application and corporate minutes were

materially false in that they purported to represent the

intent of defendant MICHAEL J. FR YE that he and his

corporation be held liable for repay ment of the debt,

when the defendants then and there we ll knew that

defendant MICHAEL J. FRYE was a mere nominee borrower who

believed himself and his company to have no actual

liability on the note. Additionally, the corporate

minutes were false in that no such directors' meeting

actually was held."

4 1 Moreover, there was no evidence that any expert had tried

and been unable to perform a handwriting analysis on the copy.

There was only the testimony of a nonexpert FBI special agent that

"there may be some handwriting analysis people that will work with

copies, but our people in our laboratory prefer originals." When

asked if they would work with copies, he said "I don't know. I

doubt it, but I don't know for sure. I don't think they would."

24 obtained with out reference to whether a directors' meeting was

actually held, and, further, that whether or not the minutes were

forged does not establish whether or not a directors' meeting was

held. 41

In my view, there is simply insufficient evidence to establish

with the requisit e degree of certainty that if a trial is held

Crouch and Frye will be convicted and in that connection will have

suffered substantial, actual prejudice from any undue delay.

I respectfully dissent. Moreover, it appears to me that this

case should be taken en banc

.