to reconstruct his mental state at the time of the alleged offense to determine whether he can
assert a defense based on a claim of mental disease or defect. But retrospective determinations of
the mental state of an accused are the bread and butter of forensic psychiatry and psychology.
Neuendank has not demonstrated that his ability to investigate his mental state has been
substantially prejudiced by the government’s delay; Dr. Wasyliw’s equivocal statement that it is
possible that a more comprehensive assessment could have been done at an earlier time is not
enough.”

We deal finally with Neuendank’s contention that his ability to examine the
circumstances under which he gave the April 1998 statement has been impaired by the
government’s delay in bringing charges. It is difficult to assess whether this impairment results
from the delay, or whether it is a result of Neuendank’s apparent psychiatric disorder(s),
involuntary repression, or some voluntary factor. No determination of the cause of the
impairment could be made without holding a hearing. But even if Neuendank were to show that
he is hindered in contesting the statement or its circumstances due to the government’s allegedly
undue delay, that would not entitle him to dismissal of the indictment. The nature and scope of
the remedy for a violation of constitutional rights is determined by the violation; the goal is to put
the victim of the violation in “the position [he] would have occupied in the absence of [the

violation].” United States v. Virginia, 518 U.S. 515, 547 (1996) (quoting Milliken v. Bradley,

> It does not appear that reasonably diligent steps have been taken to try to track down the
psychologist who treated Neuendank in 1998 following his suicide attempt to determine what she
can report regarding his mental state at the time. All we have is a brief, unexplained reference in
Dr. Wasyliw’s report that he could not locate her.

13


again; in late October of that year, he interviewed Andrew Gajewski, whom he had allegedly
been unable to interview in 1998. But after that, the government says, from late 1999 through
early 2000, Reilly worked on another fraud case and evidently retumed the Neuendank matter to
the back burner. In May and June 2000, Reilly met with Assistant United States Attorney Steven
Heinze and discussed what records from PMC and banks were needed to complete the
investigation and seek an indictment. In late June, Reilly prepared a chart of the PMC checks
generated by Neuendank that he had identified to date. In the latter half of 2000, Agent Reilly
had several contacts with PMC’s attorney, seeking additional information regarding PMC’s
investigation of the matter as well as copies of additional checks. Reilly met with Heinze in the
fall of 2000, and they identified possible mail fraud counts that could be asserted against
Neuendank.

On November 29, 2000, Heinze prepared a letter addressed to Neuendank advising him
that he was under investigation and should consider hiring counsel, and that he should contact
Heinze as soon as possible. If Neuendank did not do so by December 8, Heinze stated, he would
“begin the process of filing criminal charges.” Heinze directed Reilly to hand deliver the letter to
Neuendank. On December 6, 2000, Reilly advised Heinze that he had been to Neuendank’s
home twice but had been unable to deliver the letter. Heinze then prepared a second letter to
Neuendank, which he mailed on December 6. The letter was identical to the first, except that it
said that the process of filing charges would begin unless Neuendank or his attorney contacted
Heinze by December 15. Heinze heard nothing in response to the letter, and the letter was not
returned as undeliverable. He assumed that Neuendank had elected not to respond. However,

despite Heinze’s warning that he would initiate charges by mid-December 2000, the matter once


The manner in which this investigation was allowed to gather dust after the government
had more than enough evidence to establish probable cause and initiate charges could be held up
as a model of how xot to do it. Deterrence and retribution, two of the important goals of our
criminal justice system, are impaired when the government lets an investigation languish. If
Neuendank ultimately is convicted, punishment will not be meted out until well over six years
after the offenses were completed. It would border on the delusional to suggest that punishment
imposed after such a delay is likely to deter others from committing crimes. See United States v.
Ashford, 924 F.2d 1416, 1426 (7th Cir. 1991). But there is more to it than that. Retribution,
ordinarily a just and proper goal of a criminal justice system, can be stripped of its legitimate
meaning when undue delay occurs: imposition of severe punishment after unjustified delay can
seem more cruel than just, particularly when the offender has led a law-abiding life in the
interim. Undue delay can also impair the system’s accuracy: memories fade over time,
witnesses move on, evidence becomes stale, and all of this may, in a given situation, impair the
prosecution’s case, the defendant’s case, or both.

Mere delay, however, does not suffice to warrant dismissal of an indictment on due
process grounds. Rather, in this Circuit at least, the defendant must make a threshold showing of
concrete and substantial prejudice; if he does so, the government must explain the delay, and the
court then balances the justification against the defendant’s prejudice. Sowa, 34 F.3d at 450; see
also, e.g., United States v. Miner, 127 F.3d 610, 615 (7th Cir. 1997). Delay necessitated by
investigative needs does not deprive an accused of due process even if his defense “might have
been somewhat prejudiced by the lapse of time.” Lovasco, 431 U.S. at 796.

The government has been given two chances to explain its four-year delay in returning


again went onto the back burner.

Between March 2000 and his retirement from the FBI in September 2002, Reilly was
occupied with another fraud investigation that the government claims took most of his time.
Reilly was also assigned to O’Hare Airport for two months following the September 11, 2001
terrorist attacks on New York City and Washington, D.C, and he was involved in terrorism-
related investigations outside of Chicago in November and December 2001 and again in January
and February 2002. It does not appear that any other agent was asked to work on the Neuendank
investigation at any time during this period.

Heinze met with Reilly in April 2002 and again in August 2002 to discuss what charges
could be returned and what investigative steps remained to be done. However, it appears that
none of those steps (whatever they were) were taken in the months that remained prior to Reilly’s
retirement from the FBI in September 2002. Upon Reilly’s retirement, the investigation was
reassigned to Special Agent David Crawford. Crawford conducted interviews with PMC
employees to determine what false records Neuendank had created; these interviews essentially
replicated those that Reilly had conducted in March 1998. Crawford also interviewed American
Express and Postal Service employees regarding the “mailing” element of the mail fraud charges
that were eventually returned. As noted earlier, Neuendank was indicted on November 7, 2002.
The indictment included two mail fraud charges, based on mailings claimed to have taken place
on November 10 and December 9, 1997.

Following his indictment, Neuendank was evaluated at the request of his counsel by
psychologist Dr. Orest Wasyliw and psychiatrist Dr. Babatunde Okuleye of the Isaac Ray

Forensic Group regarding his fitness to stand trial and his mental state at the time of the alleged


offense. Wasyliw and Okuleye made extensive reports in which they concluded that Neuendank
was fit to stand trial, but that he suffered from a psychiatric disorder referred to as schizoid
personality disorder with passive-dependent and avoidant personality traits. The Fourth Edition
of the Diagnostic and Statistical Manual of the American Psychiatric Association (DSM-IV) says
that schizoid personality disorder consists of a pervasive pattern of detachment from social
relationships and a restricted range of expression of emotions in interpersonal settings,
characterized by a desire to engage in solitary activities, emotional detachment, lack of close
friends and confidants other than relatives, and disinterest in relationships and sexual activity
with others. Avoidant personality disorder is defined in DSM-IV as a pattern of social inhibition,
feelings of inadequacy, and hypersensitivity to negative evaluation; dependent personality
disorder is defined as a pervasive need to be taken care of that leads to submissive and clinging
behavior and fear of separation. Dr. Wasyliw also indicated that there was some possibility that
Neuendank might be suffering from an “adjustment disorder” with anxiety and a depressed
mood, or a “dysthymic disorder.” The former involves the development of anxiety and a
depressed mood in response to an identifiable stressor, and the latter involves experiencing a
chronically depressed mood for an extended period.

In his evaluation, Dr. Wasyliw indicated that Neuendank’s memory regarding his suicide
attempt “was very sparse” and that his memory generally appeared to function below
expectations for a person of his above-average intellectual level. Dr. Wasyliw concluded that
this impairment appeared genuine, not feigned or exaggerated. He also stated that Neuendank
tended to deny emotional problems, minimized personal difficulties, and attempted to portray

himself in a socially desirable manner despite his awkwardness and “negative self-concept.” He


generally United States v. Lovasco, 431 U.S. 783 (1977); United States v. Sowa, 34 F.3d 477,
450-52 (7th Cir. 1994). The primary protection against delay afforded to an accused is the statute
of limitations. See United States v. Marion, 404 U.S. 307, 322 (1971). It is well established,
however, that the due process clause of the Fourteenth Amendment provides additional
protection beyond that afforded by the statute of limitations. Jd. at 324; Lovasco, 431 U.S. at
789.

Neuendank contends that the government had no legitimate investigatory justification for
the four-plus year delay following its complete, or near-complete, knowledge of the
circumstances of the offense as of mid-1998. He alleges that he was prejudiced by the
government’s delay in three specific ways. First, Neuendank says that he settled the civil case
believing, or at least assuming, that the criminal investigation had been resolved. He contends
(though he supplies no affidavit or other evidence to this effect) that if the government had
indicted this case in a timely manner, he would have asserted his Fifth Amendment privilege
against self-incrimination in the civil case until the criminal matter had been resolved. Instead,
he settled the matter, thus handing the government evidence that it intends to use at trial to prove
his guilt. Second, Neuendank argues, although the unusual circumstances of the offense suggest
that it may have been the product of a mental disease or defect, the lapse of time combined with
his memory loss have made it impossible for him to investigate the offense fully or to be
evaluated properly regarding his mental state at the time of the offense. Third, Neuendank
argues, these same factors have made it impossible to reconstruct his mental state at the time of
his April 1998 statement to the FBI, thus preventing him from seeking to suppress the statement

or put it in context.


Minute Ordet Far (06/97)

United States District Court, Northern District of Ilinois

Name of Assigned Judge Sitting Judge if Other
enor Magistrate Judge Matthew F. Kennelly than Assigned Judge
CASE NUMBER 02 CR 1079 DATE 8/14/2003
CASE USA vs. Michael Neuendank
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.
DOCKET ENTRY:
() Oo Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) oO Answer brief to motion due. . Reply to answer brief due :
(4) oOo Ruling/Hearing on set for at
(5) o Status hearing[held/continued to] [set for/re-set for] on set for at
(6) oO Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) o Trial[set for/re-set for] on at
(8) im [Bench/Jury trial] [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CFRCP4(m) OlLocal Rule 41.1 C)FRCP41(a)(1) [1 FRCP41(a)(2).
(ao) of [Other docket entry} For the reasons set forth on the attached Memorandum Opinion and Order,
the Court denies defendant’s motion to dismiss the indictment.
(1) ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.

Notices mailed by judge’s staff.

Notified counsel by telephone.

oY | Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

4unoo Lorisia’s'n

courtroom
OR depaty’s
initials

PHSDIAY 1 ¢ SAY EO

SNi 1 3 HOaibelinasttescites ia 4
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railing deputy initials



of the alleged fraud was modest enough that no reasonable person in Neuendank’s position — at
least not someone who, like Neuendank, was represented by competent counsel — would have
tegarded it as indicating that the authorities had decided not to file charges. To put it another
way, assuming Neuendank actually believed that criminal charges were no longer forthcoming at
that time, his belief was unreasonable.’

By contrast, Neuendank has supported his contention that his memory of the events at
issue is impaired. Though the matter is not beyond dispute, Dr. Wasyliw concluded that
Neuendank suffers from an actual impairment of his memory. Neuendank has also supported his
claim that his memory deficits impair his ability to examine, or present evidence regarding, his
mental state at the time of the offense, as well as at the time of his statement to the FBI. It was
for this reason that the Court directed the government to explain its delay.

Upon further examination, however, Neuendank’s claims are insufficient to warrant
dismissal of the indictment. First, he has failed to demonstrate that his ability to investigate the
underlying charges or his mental state has been substantially impaired because of the
government’s undue delay. To do that, Neuendank would have to show that his ability to
investigate the charges, including his mental state at the time, is significantly decreased now
compared to what it would have been had the government filed charges within a reasonably
prompt period after it had obtained the necessary evidence. That does not mean February,
March, or April 1998. No reasonable person, at least no knowledgeable one, expects that charges

in a fraud case, particularly one involving an extended scheme like this one, will be returned

' This discussion is not intended to preclude Neuendank from seeking to exclude
evidence of the settlement on other grounds.

il


charges; both times it has used these opportunities primarily for the purpose of filing additional,
unauthorized briefs regarding the issue of prejudice. Nonetheless, what emerges from the
government’s submissions is that the investigation was repeatedly shelved because the
investigator was pursuing other matters perceived to be more important or pressing. The
suggestion apparently is that FBI agents can work on only one thing at a time — an absurd
proposition. It is beyond question that the investigative resources of law enforcement agencies
and prosecutor’s offices are limited and must be prioritized. But it appears to the Court that the
only thing that spurred the return of the indictment against Neuendank was the original
investigating agent’s retirement, combined perhaps with the impending expiration of the statute
of limitations on certain possible mail fraud charges.

The government has made no effort to show that the FBI’s resources were so severely
taxed from 1998 through 2002 that no one could pursue the matter on reassignment or otherwise,
or conversely that it was reasonable simply to let the matter gather dust until the clock was about
to run out. On the other hand, there is no basis on the current record to believe that the
government acted for tactical advantage, or even that it was aware of any specific way in which
Neuendank would be harmed, or the government advantaged, by delay. Although it is
conceivable that Neuendank could elicit something along those lines at a hearing, the Court sees
no need to hold a hearing, for as we explain below, Neuendank has failed to demonstrate the type
of prejudice that Sowa requires to justify dismissal.

Neuendank’s settlement of the civil lawsuit in 1998, allegedly under a misapprehension
that the criminal investigation had been concluded, cannot be considered to be prejudice that was

caused by the government’s unreasonable delay. At that point, the delay following the discovery

10


concluded that Neuendank “demonstrates a substantial vulnerability to impairment of his
capacity to perceive reality appropriately,” specifically that he tends to misperceive events and
form mistaken impressions of others and their actions and “tends to deal with challenging
situations in an escapist manner in which he subjugates reality to fantasy.” These deficits, Dr.
Wasyliw reported, “are likely to result, at times, in instances of poor judgment in which he fails
to anticipate the consequences of his actions and misconstrues what constitutes appropriate
behavior.”

Dr. Wasyliw reported that Neuendank had denied memory for much of the conduct for
which he had been indicted. He characterized Neuendank’s description of his reasons for taking
the money as “insufficient to allow a full and comprehensive assessment of his mental state at the
time of the crime, or to fully assess any possible exacerbating or mitigating circumstances” — for
example, the extent to which his traits of dependency or his “predispositions to fantasy
preoccupations” had contributed to the offense or had distorted his understanding of his
relationship with Daniel Gajewski. Dr. Wasyliw stated that he could not rule out the possibility
that Neuendank’s limited memory for these events was “selective and self-serving,” but he
indicated that the apparent selectivity of memory was not entirely self-serving and “includes
elements of intense psychological repression.” He stated that “[i]t is possible that a more
comprehensive and complete assessment could have been accomplished, if it had been conducted
closer in time to the offense.”

Discussion
Neuendank has moved to dismiss the indictment, alleging that he has been significantly

and unfairly prejudiced by the government’s allegedly unjustified delay in returning charges. See


was working with his attorneys, Luke DeGrand and Larry Lauter, to reconstruct how much
money was involved. He said that PMC contended that he had written about $450,000 in
unauthorized checks; Neuendank said he recalled writing around $200,000 to $250,000 worth of
checks and did not know what accounted for the remainder.

On March 10, 1998, prior to interviewing Neuendank, Agent Reilly had interviewed
PMC’s CEO and general manager. These individuals provided Reilly with a detailed rendition of
the alleged scheme, including a schedule of converted checks, a detailed description of how the
scheme was concealed, identification of the bank accounts in which Neuendank had deposited
the checks, and the fact that much of the money had been used to benefit Daniel Gajewski.
Following the Neuendank interview, Reilly interviewed Daniel Gajewski on July 1, 1998 and
Gajewski’s wife Tracy Gajewski on June 1, 1998. Both stated that they had received substantial
gifts and sums of money from Neuendank. Daniel reported that Neuendank had told him that he
should consider Neuendank to be his father and that he would take care of Daniel and his family.
Gajewski also told Reilly that Neuendank had loaned his brother Andrew Gajewski moncy to pay
some outstanding bills. The government contends that Reilly attempted to interview Andrew,
but he balked. The investigation then evidently went onto the back burner.

At some unknown point in 1998, PMC filed a civil lawsuit against Neuendank in state
court. Neuendank, represented by counsel, reached a settlement of the case in December 1998.
He agreed to make an initial payment of $13,000 to PMC, followed by monthly payments of
$800 until the entire debt was paid. Neuendank has met his obligations under the agreement thus
far.

In the latter part of 1999, Reilly appears to have briefly worked on the investigation


433 U.S. 267, 280 (1977)).? The responsibility of a court upon finding a constitutional violation
is “to construct a remedy . . . that is tailored to the injury caused by the violation.” United States
y. All Assets & Equipment of West Side Building Corp., 58 F.3d 1181, 1193 (7th Cir. 1995).
Thus if the government’s unreasonable delay actually were shown to impair Neuendank’s ability
to challenge or explain his April 1998 statement to the FBI, that would, at most, entitle him to
seek the statement’s exclusion from evidence, whether pursuant to principles of due process or
Federal Rule of Evidence 403 (on the grounds that the unfair prejudice from the statement’s
admission substantially outweighs its probative value).

In sum, because Neuendank has failed to show that his defense has been substantially
impaired by the government’s delay in bringing charges, we need not conduct the balancing test
required by Sowa.

Conclusion

For the reasons stated above, the Court denies defendant’s motion to dismiss the

indictment. The case remains set for status hearing on August 15, 2003 at 9:30 a.m. for the

purpose of setting a trial date.

U.

MATTHEW F. KENNELLY
United States District Judge
Date: August 14, 2003

3 Milliken and the cases upon which it relied for this proposition all involve issues
concerning complicated equitable relief. But the Seventh Circuit has applied this same principle
outside that particular context; the Al/ Assets case, cited in the text, was a civil forfeiture case.
And in any event, dismissal of an indictment and exclusion of evidence can be considered to be
forms of equitable relief for constitutional violations.

14


of the alleged fraud. Reilly’s memorandum summarizing the interview reports that Neuendank
admitted writing PMC checks to pay personal American Express card bills and stated that he had
incurred the charges to pay for gifts for, and the wedding reception of, a PMC employee named
Daniel Gajewski whom he had befriended in the summer of 1997. Neuendank also admitted that
he had written PMC checks to himself. He stated that he had written one such check to assist
Gajewski to pay for training at a technical school and several others to pay Gajewski’s rent. He
further stated that Gajewski had introduced him to his brother and the brother’s wife, and that he
(Neuendank) had also written a PMC check to the wife’s landlord. Neuendank stated that he
considered his payments to the Gajewskis to be “loans,” though they had not been repaid.

Neuendank also told the agents that a significant portion of the funds that he had obtained
from PMC — somewhere between $10,000 and $30,000 — was intended to reimburse himself for
expenses he claimed to have incurred to pay for renovations at PMC’s facilities. He stated that
he did not know whether his supervisor had been aware that he had incurred these expenses or
had reimbursed himself for them.

Neuendank reported that he had been fired from PMC and that shortly after that he had
attempted suicide, resulting in a lengthy stay at St. Francis Hospital in Evanston. He also advised
that he was being counseled by a psychologist and a psychiatrist.

Neuendank stated that he had written the checks manually so that he “could do what [he]
did.” He advised that the checks had been removed from PMC’s records. Though he said he
could not recall doing this, he stated that it was possible he had done so. Neuendank told the
agents “that his psychologist thinks that the whole situation was very overwhelming to him and

that he can only remember certain things he did and not other things he did.” He reported that he


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
UNITED STATES OF AMERICA )
)
vs. ) Case No. 02 CR 1079
)
MICHAEL NEUENDANK )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Michael Neuendank, who is charged with mail fraud, has moved to dismiss the
indictment for allegedly prejudicial pre-indictment delay. For the reasons stated below, the Court
denies Neuendank’s motion.

Facts

Neuendank was indicted for mail fraud on November 7, 2002. The indictment alleges
that between 1996 and February 1998, Neuendank schemed to defraud his former employer,
Progressive Manufacturing Corporation, of money, property, and the right to his honest services.
Specifically, the indictment alleges that Neuendank, who was PMC’s controller, circumvented
the company’s computerized check generation system and issued company checks payable to
himself and to American Express (the latter to pay personal credit card bills), used a signature
stamp with the name of a PMC officer to “sign” the checks, and created false entries in the
company’s books and made other false statements to conceal the fraud. By these means, the
indictment alleges, Neuendank obtained PMC funds totaling about $450,000.

Neuendank was interviewed by FBI Special Agents James Reilly and Diane Rivers at his

home on April 6, 1998, about six weeks after he had been fired by PMC following its discovery

Hb



instantaneously. Time (in some cases a significant amount of it) is reasonably required to obtain
documentation of the fraud and its proceeds, interview victims, potential participants and other
witnesses, and pursue leads that arise during the investigation — such as PMC’s and Neuendank’s
disclosure that Daniel Gajewski had received or benefitted from a significant amount of the
proceeds of the alleged fraud. That disclosure suggested that Gajewski himself might have
exposure and thus warranted follow up to determine his involvement or lack thereof. All of this
legitimately required a number of months to complete. For these reasons, no reasonable
argument can be made that the government was required to return charges before Neuendank’s
interview in early April 1998, a scant six weeks after PMC had reported the alleged fraud.

Reilly’s memorandum of his April 1998 interview of Neuendank reveals that
Neuendank’s memory regarding the underlying events was already significantly impaired at that
early stage — or at least Neuendank claimed it was. Dr. Wasyliw’s summary of his 2003
interview with Neuendank likewise reveals memory deficits regarding some aspects of the
alleged scheme and good memory regarding other aspects. Dr. Wasyliw’s summary is less
detailed than Reilly’s, but on the record before the Court we cannot say that this reflects
materially greater memory impairment in 2003 than in 1998; it is just as likely that it resulted
from Dr. Wasyliw’s need for less detail than the agents had elicited. In sum, even if Neuendank
had been indicted in the latter part of 1998, his memory regarding the events already would have
been significantly impaired in a way not attributable to undue delay by the authorities.
Neuendank has not established any particular way in which his memory is substantially more
impaired now than it was at that time.

The Court acknowledges Neuendank’s argument that it has become more difficult for him

12