Court Opinion

ID: 7104
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:24:53+00
Date Added: 2024-06-11T13:34:21.975534
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UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                                No. 93-7719

UNITED STATES OF AMERICA,
                                                    Plaintiff-Appellant,

                                   versus

A. GUY CROUCH, III and
MICHAEL J. FRYE,
                                                   Defendants-Appellees.

           Appeal from the United States District Court
                for the Southern District of Texas

                              (April 20, 1995)

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

POLITZ, Chief Judge:

     The   district   court    dismissed    indictments   against   A.   Guy

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

banking activity.     For the reasons assigned, we affirm.

                                 Background

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

Association of Texas, a failed institution, federal investigators

discovered that the institution had been engaged in a "cash for
trash" scheme.1 Delta officials violated federal regulations which

prohibited excessive loans to one borrower by using bogus nominee

borrowers who bore no personal liability for the loans contracted.

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

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

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

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

nominee borrower for Ferguson.      In 1986 the government began an

investigation into Delta's activities, focusing on Gerjes and

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

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

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

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

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

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

bank fraud, 18 U.S.C. §§ 2, 1344.

     Citing the eight-plus years between the alleged crimes in

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

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

judge recommended dismissal because of both presumptive and actual

prejudice caused by the passage of time.       Following a de novo

review the district court adopted the recommendation, holding that

      1
       Delta made loans to real estate investors conditioned on
their purchase of property acquired by Delta primarily through
prior defaults.    The "sale" of this property reduced Delta's
liabilities, lowered its required cash reserves, and artificially
increased its net worth, thereby evading closer inquiry into its
operations.

                                 2
defendants had suffered presumptive prejudice because of the delay

and finding actual prejudice resulting from the delay due to the

unavailability of testimony because of death and memory loss and

the disappearance of exculpatory records.              Applying the balancing

test directed in United States v. Brand2 and in United States v.

Townley3 for claimed violations of due process resulting from

pre-indictment        delay,   the   court   found    that    the    government's

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

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

indictment; the government timely appealed.

                                     Analysis

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

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

show prejudice, the government contends that their inability to

demonstrate prosecutorial bad faith for the dilatory indictment

defeated      their   motion   for   dismissal.        It    cites   post-Townley

decisions for the proposition that to establish a due process

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

the   prosecutor      intentionally     delayed      the    indictment   to   gain

tactical advantage.4

      2
      556 F.2d 1312 (5th Cir. 1977), cert. denied, 434 U.S. 1063
(1978).
      3
      665 F.2d 579 (5th Cir.), cert. denied, 456 U.S. 1010 (1982).
          4
       See United States v. Byrd, 31 F.3d 1329 (5th Cir. 1994);
United States v. Neal, 27 F.3d 1035 (5th Cir.), cert. denied, _____
U.S. _____, 115 S. Ct. 1165 (1994); and United States v. Amuny, 767
F.2d 1113 (5th Cir. 1985).

                                        3
     In United States v. Marion5 the Supreme Court held that

although the primary protection against undue delay prior to

arrest, indictment, or information is the appropriate statute of

limitations, the due process clause of the fifth amendment offers

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

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

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

prejudicial delay as "an intentional device to gain tactical

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

automatic dismissal of the indictment.

     Following Marion we began the development of a test for

violations of due process in this context.                Despite the Marion

Court's     express     refusal   to     "determine      when   and   in    what

circumstances actual prejudice resulting from pre-accusation delays

requires the dismissal of the prosecution,"7 in dicta we used the

statement that a showing of prosecutorial bad faith required

automatic dismissal for the very different proposition that such a

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

violation.8    Because the defendants in those cases were unable to

     5
      404 U.S. 307 (1971).
     6
404 U.S. at 322.
     7
      Id.
     8
      See, e.g., United States v. Avalos, 541 F.2d 1100 (5th Cir.
1976), cert. denied, 430 U.S. 970 (1977); United States v. Butts,
524 F.2d 975 (5th Cir. 1975).

     Avalos, however, noted     a caveat to use of a standard
requiring a showing of prosecutorial bad faith, stating:

                                         4
make a showing of prejudice due to delay, we did not apply this

statement in a dispositive ruling.

     The Supreme Court next considered this issue in United States

v. Lovasco,9 stating that proof of prejudice was "a necessary but

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

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

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

delayed prosecution violates "elementary standards of fair play and

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

base of our civil and political institutions."12   After balancing

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

reason for delay -- its continuing investigation -- the Lovasco

Court upheld dismissal of the indictment.

     The Lovasco Court also noted that following Marion neither it

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

consider the constitutional significance of various reasons for

     There is no Supreme Court authority squarely holding that
     satisfaction of both elements of the test is necessary to
     find a due process violation [and] there remains
     substantial doubt whether, in a case in which actual
     pre-accusation    prejudice    was   overwhelming,    the
     government's purposeful delay would have to be shown; or,
     alternatively, where the government's misconduct was
     blatant, whether the defendant would still bear the
     burden of showing actual prejudice.
541 F.2d at 1107 n.9.
     9
      431 U.S. 783 (1977).
     10
          Id. at 790.
     11
          Id. at 795.
     12
          Id. at 790 (citations omitted).

                                   5
delay."13        Instead of passing upon this issue, the Court opted to

leave such rulings to future decisions of the lower courts applying

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

      In Brand, one of our first cases applying the teaching of

Lovasco, after noting that actual prejudice must be shown as a

threshold matter, we stated that Lovasco did "not indicate that

governmental interests not amounting to an intentional tactical

delay will automatically justify"15 such prejudice.                 Rather, we

concluded that Lovasco stood for balancing the government's need

for   the        delay   against   the   actual   prejudice   suffered   by   the

defendant.

      We next addressed the issue in Townley and crystallized the

test for due process violations thusly:

      [T]he accused bears the burden of proving the prejudice
      and, if the threshold requirement of actual prejudice is
      not met, the inquiry ends there. Once actual prejudice
      is shown, it is necessary to engage in a sensitive
      balancing of the government's need for an investigative
      delay against the prejudice asserted by the defendant.
      The inquiry turns on whether the prosecution's actions
      violated fundamental conceptions of justice or the
      community's sense of fair play and decency. Inherent in
      the adoption of a balancing process is the notion that
      particular reasons are to be weighed against the
      particular prejudice suffered on a case-by-case basis.
      . . . [D]ue process . . . turns upon whether the degree
      of prejudice thereby sustained by the accused is
      sufficiently balanced by the good-faith reasons advanced
      by the government.16

      13
           Id. at 797.
      14
           Id.
      15
           556 F.2d at 1317 n.7.
      16
665 F.2d at 582 (citations omitted) (emphasis added).

                                           6
The Townley court left no doubt that a showing of bad faith by the

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

noted:

        [T]he Lovasco balancing test would be reduced to mere
        words if indeed the government's 41-month delay in
        bringing the indictment were excusable, whatever the
        prejudice caused the defendant, simply by a showing that
        the government was negligent, however grossly, and not
        bad-intentioned.17

        Several subsequent decisions overlooked Townley's holding and

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

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

when        the        delay    resulted      from   an   ill-intentioned    act   by   the

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

bound to follow the earliest dispositive articulation of a rule as

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

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

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

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

The district court correctly relied upon the holdings of Brand and

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

dismiss.

        17
             Id.
       18
     United States v. Wehling, 676 F.2d 1053 (5th Cir. 1982). See
also, e.g., Amuny; Byrd; Neal; and United States v. Beszborn, 21
F.3d 62 (5th Cir.), cert. denied, _____ U.S. _____, 115 S. Ct. 330
(1994).
                  19
          Burlington Northern Railroad Co. v. Brotherhood of
Maintenance Way Employees, 961 F.2d 86, 89 (5th Cir. 1992), cert.
denied, _____ U.S. _____, 113 S. Ct. 1028 (1993) (citations
omitted).

                                                     7
     We find merit in one part of the government's challenge to the

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

of approximately eight years from the alleged commission of the

crimes     to   the   issuance   of   the    indictment   was   presumptively

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

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

existence of presumptive prejudice in this pre-indictment delay

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

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

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

     Our     precedents   require     that   the   triggering   prejudice   be

actual, not presumptive.         Twenty years ago we stated that

     when pre-indictment delay is asserted, actual prejudice
     and not merely the real possibility of prejudice inherent
     in any extended delay is a necessary element which must
     be shown before the restraints of the due process clause
     will be applied to bar a prosecution because of a
     delay.22

Townley and subsequent decisions23 recognized that the defendant

must show proof of actual prejudice as a threshold requirement.

     20
          _____ U.S. _____, 112 S. Ct. 2686 (1992).
     21
          Byrd, 31 F.3d at 1339 (emphasis in original); Marion.
     22
      United States v. McGough, 510 F.2d 598, 604 (5th Cir. 1975)
(emphasis added) (citations omitted). Accord, Butts at 977 ("The
mere passage of time [does] not constitut[e] the type of actual
prejudice necessary to set aside an indictment returned within the
appropriate statute of limitations. . . ."); United States v. West,
568 F.2d 365, 367 (5th Cir.), cert. denied, 436 U.S. 958 (1978)
("[I]t is readily inferable from the decisions of this court that
the defendants generally bear the burden of establishing actual
prejudice.").
     23
          Byrd; Neal; Beszborn; Amuny.

                                       8
The    district          court's    conclusion       that   there        was    presumptive

prejudice from the mere passage of time was incorrect.

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

finding          of   actual    prejudice,    focusing      upon    Crouch's       loss   of

testimony due to the deaths of several potential witnesses, and

upon    Frye's          claim   that    critical     and    exculpatory         documentary

evidence was missing.                  The government challenges this finding,

contending that the defendants' claim of prejudice consists only of

vague assertions of lost witnesses, faded memories, or misplaced

documents.

       Findings of actual prejudice are reviewed under the clear

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

supports the            finding    of    prejudice    due   to     the    above    factors,

reflecting that Crouch established exactly which witnesses were

lost    and       how    the    lost    witnesses    were    crucial       to    rebut    the

credibility and character of Gerjes and Ferguson, potentially the

government's star witnesses.25               These potential witnesses included

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

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

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

officers about his unauthorized operations.                        Other corroborating

witnesses included Tranquillo Gubert, another director, and Larry

Tscherner, former vice president of an entity involved in the

       24
            Beszborn, 21 F.3d at 66.
            25
        Further, the record indicates that because of Crouch's
cooperation against Gerjes, there is the likelihood of the latter's
animosity.

                                              9
scheme, who would have testified about their dealings with Gerjes

and Ferguson.        As Gerjes and Ferguson likely would be cooperating

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

testimony would also be crucial for rebuttal and impeachment

purposes.

      The   record     also    contains       references      to    lost    exculpatory

documentary     evidence,       including        a   lost    "Profit      Participation

Agreement" between Frye and Ferguson's corporations that allegedly

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

the land purchased, rebutting claims that Frye was not materially

involved      with    the    loan     and    land       purchase.         Further,    the

authenticity of a copy of a document constituting evidence of an

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

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

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

record establishes that only an original copy can be examined for

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

method by which Frye can show that the signatures on the waiver

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

had   lost,    either       through    routine       disposal       or    surrender    to

authorities,26       personal    records         that     could    have    assisted    in

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

irreplaceable; this fact, when combined with both expert evidence

validating      the    defendants'          claim    of     memory       loss   and   the

      26
      Crouch bases his failure to retain records in part upon his
receipt, on at least three separate occasions, of assurances from
the government that he was not a target of any investigation.

                                            10
aforementioned         lost    exculpatory    testimony,   amply      supports   the

court's finding that Crouch and Frye suffered significant actual

prejudice.

     Consistent         with    Townley's    holding,   after    finding    actual

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

actual prejudice suffered against the reasons for the delay.                     The

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

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

receipt     of   the    criminal    referrals,    but   did     not   initiate    an

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

reasons for the long delay in launching the investigation were,

essentially, lack of manpower and the low priority which this

investigation was assigned.           Although "prosecutorial overload and

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

balance of due process considerations,"27 this slight weight is

insufficient to outweigh the actual prejudice to Crouch and Frye

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

circumstances presented by this particular case, we conclude that

requiring Crouch and Frye to stand trial now would be fundamentally

unfair and violative of due process.

     The judgment of the district court dismissing the indictment

is AFFIRMED.

     27
665 F.2d at 586.
     28
       Although the actual delay was longer (by about 18 months),
the period of the investigation is not considered. See Lovasco,
supra.

                                         11
GARWOOD, Circuit Judge, dissenting:

      I respectfully dissent.

      My   first   concern      is   that   the   majority    departs       from    the

overwhelming weight of precedent in this Circuit by holding that,

where limitations have not run, a defendant may nevertheless

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

the government did not intentionally delay the indictment to gain

tactical advantage or for other impermissible purpose, and the

delay arose only because of the lack of manpower and the low

priority assigned the investigation. A less than exhaustive review

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

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

judges of this CourtSQtwenty-five of the thirty-two individuals who

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

it   split   October      1,    1981SQhave    authored,      or    joined    without

reservation, unanimous opinions in some eighteen different cases

holding    or   stating    in    substance    that    "[t]o       prove   that     pre-

indictment delay violated his due process rights, a defendant must

demonstrate     that      the    prosecutor       intentionally       delayed       the

indictment to gain a tactical advantage and that the defendant

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

States v. Byrd, 31 F.3d 1329, 1339 (5th Cir. 1994).29

      29
          Other post-Lovasco published opinions of this Court so
holding or stating include: United States v. Neal, 27 F.3d 1035,
1041 (5th Cir.), cert. denied, 115 S. Ct. 1165 (1994); United States
v. Beszborn, 21 F.3d 62, 65-66 (5th Cir.), cert. denied, 115 S. Ct.
330 (1994); United States v. Hooten, 933 F.2d 293, 296 (5th Cir.
       Citing our acknowledged rule that "one panel may not overrule

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

banc    reconsideration     or    superseding   decision   of   the   Supreme

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

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

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

(1978), and United States v. Townley, 665 F.2d 579 (5th Cir.),

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

we may have had the functional equivalent of en banc establishment

of the rule most recently stated and applied in Byrd, it is in any

event clear to me that Brand and Townley cannot bear the weight

assigned them.

       As   to   Brand,   its    statements   that   intentional   delay   for

tactical advantage need not be shown and that instead the reasons

for the delay should be balanced against the resulting prejudice,

1991); Dickerson v. Guste, 932 F.2d 1142, 1144 (5th Cir.), cert.
denied, 112 S. Ct. 214 (1991); United States v. Delario, 912 F.2d
766, 769 (5th Cir. 1990); United States v. Varca, 896 F.2d 900, 904
(5th Cir.), cert. denied, 111 S. Ct. 209 (1990); United States v.
Carlock, 806 F.2d 535, 549 (5th Cir. 1986), cert. denied, 107 S. Ct.
1161 (1987); United States v. Johnson, 802 F.2d 833, 835, 836 (5th
Cir. 1986); United States v. Scott, 795 F.2d 1245, 1249 (5th Cir.
1986); United States v. Ballard, 779 F.2d 287, 293 (5th Cir.),
cert. denied, 106 S. Ct. 1518 (1986); United States v. Amuny, 767
F.2d 1113, 1119-1120 (5th Cir. 1985); United States v. Wheling, 676
F.2d 1053, 1059 (5th Cir. 1982); United States v. Hendricks, 661
F.2d 38, 39-40 (5th Cir. 1981); United States v. Nixon, 634 F.2d
306, 310 (5th Cir. 1981); United States v. Durnin, 632 F.2d 1297,
1299-1300 (5th Cir. 1980); United States v. Ramos, 586 F.2d 1078,
1079 (5th Cir. 1978); United States v. Willis, 583 F.2d 203, 207
(5th Cir. 1978).
       30
          Burlington Northern Railroad Co. v. Brotherhood of
Maintenance Way Employees, 961 F.2d 86, 89 (5th Cir. 1992), cert.
denied, 113 S. Ct. 1028 (1993) (citations omitted).

                                       13
556 F.2d at 1317 n.7, are plainly dicta.31          Brand rejected the

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

demonstrated any prejudiceSQan admitted requirement for relief

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

the end of the prejudice discussion in the textSQwhich never even

adverts   to   whether   a   further    showing   beyond    prejudice     is

requiredSQfootnote 7 is called for.       It is only in this footnote

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

this stage the Brand court had already determined to deny relief

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

7 of BrandSQor in its textSQidentifies the reason for the delay or

purports to characterize the reason as either being or not being

intentional for tactical advantage, or negligent, or otherwise

improper or insufficient.     Nor does anything in BrandSQin its text

or its footnotesSQpurport to balance the reason for the delay

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

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

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

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

footnote 7 that a defendant need not show intentional tactical

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

of its ratio decidendi, and is purely dicta.

     31
          As the majority inferentially recognizes, dicta by one
panel does not bind a subsequent panel. See Matter of Dyke, 943
F.2d 1435, 1445 & n.28 (5th Cir. 1991); Nicor Supply Ships
Associates v. General Motors, 876 F.2d 501, 506 (5th Cir. 1989).
As a practical matter, such a principle is necessary to the
effective functioning of a large multi-panel court such as the
Fifth Circuit.

                                   14
       TownleySQa quorum decision by two judgesSQmay well be a holding

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

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

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

Byrd    and        its    predecessors,      that     alone   would       have    justified

affirmance,         even    though     we   concluded       that    "the    lengthy       pre-

indictment          delay   somewhat       prejudiced     Townley."         Id.     at    586.

However, we          proceeded    to    actually       balance      the    extent    of    the

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

balancing could show a due process violation from pre-indictment

delay even though there was no "intentional tactical delay or

harassment on the part of the government."                            Id. at 582.           We

ultimately concluded that the way the trial actually unfolded, and

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

such        that    the     prejudice       to    Townley     was    not     sufficiently

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

press of other investigations . . . low-priority accorded to the

present       investigations         and     .    .   .   changes     of     governmental

prosecuting personnel," id. at 581), as to amount to a denial of

due process.32

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

nevertheless not binding because it conflicts with our earlier

holding in United States v. Durnin, 632 F.2d 1297 (5th Cir. 1980).

In Durnin, we rejected a due process claim of pre-indictment delay

       32
          As discussed in the text below, it is also significant
that in Townley we reviewed (and affirmed) a conviction following
trial, while here we review a pre-trial dismissal.

                                                 15
on the sole basis that the defendant had not shown a motive on the

part of the prosecutor to use the delay for tactical advantage, and

we did so without even evaluating the presence or extent of

prejudice:

     "Appellant alleges that the delay denied him due process
     because he lost the testimony of an important witness in
     the interim between when the government could have
     brought an indictment and when it finally chose to do so.
     However, to establish a violation of the Due Process
     Clause in this context, appellant must show, not only
     substantial prejudice flowing from an inordinate delay,
     but also a motive on the part of the prosecutor to use
     the delay to gain a tactical advantage. . . . [citations]
     Appellant does not contend that the government sought to
     delay his indictment for tactical advantage, and the
     district court specifically found that the delay resulted
     from the government's good-faith attempt to ascertain
     appellant's guilt beyond a reasonable doubt. Since this
     finding is abundantly supported by the record, the
     district court's ruling on the motion to dismiss must be
     affirmed."    Id. at 1299-1300 (citations and footnote
     omitted; emphasis added).

     There   is   no   reasonable   basis   upon   which   Townley   can    be

characterized as holding while at the same time treating Durnin as

dicta. Durnin is thus the controlling precedent. The overwhelming

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

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

agree to the majority's application of a contrary rule.33

     33
          I note in passing that the Fifth Circuit does not stand
alone in its holdings that to sustain a due process claim of pre-
indictment delay the defendant must show "not only substantial
prejudice . . . but also a motive on the part of the prosecutor to
use the delay to gain a tactical advantage." Durnin at 1299. In
United States v. Sowa, 34 F.3d 447, 450 (7th Cir. 1994), the
Seventh Circuit stated,

     "To establish that a pre-indictment delay violated due
     process, [defendant] Sowa must prove that the delay
     caused actual and substantial prejudice to his fair trial
     rights, and there must be a showing that the government

                                    16
       My second concern is that here the entire indictment as to

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

that    only   the   very   clearest     showing   of   virtually   certain

substantial actual trial prejudice should justify such a pretrial

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

met here.

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

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

which will likely be unfair.       In United States v. MacDonald, 98
S. Ct. 1547, 1553 (1978), the Supreme Court held that "[u]nlike the

protection afforded by the Double Jeopardy Clause, the Speedy Trial

Clause does not . . . encompass a 'right not to be tried' which

must be upheld prior to trial if it is to be enjoyed at all."           The

same conclusion applies, a fortiori, to due process claims of pre-

       delayed indictment to gain a tactical advantage or some
       other impermissible reason . . . . Sowa's claim . . .
       fails to meet the requirements of the second prong. . .
       . [D]ue process is only implicated if the government
       purposely delayed the indictment to take advantage,
       tactically, of the prejudice or otherwise acted in bad
       faith."

The Second Circuit stated the same rule in United States v. Hoo,
825 F.2d 667, 671 (2d Cir. 1987), cert. denied, 108 S. Ct. 742
(1988).   In his dissent from the denial of certiorari in Hoo,
Justice White observed that the First, Third, Tenth, and Eleventh
Circuits, in addition to the Second, "have similarly required a
showing of prosecutorial misconduct designed to obtain a tactical
advantage over the defendant or to advance some other impermissible
purpose in order to establish a due process violation." Hoo v.
United States, 108 S. Ct. 742 (1988) (White, J., dissenting from
denial of certiorari). Justice White identified the Fourth and
Ninth Circuits as applying a balancing test. Id.

                                       17
indictment delay.34   The Supreme Court further stated in MacDonald:

          "Before trial, of course, an estimate of the degree
     to which delay has impaired an adequate defense tends to
     be speculative. . . . The essence of a defendant's Sixth
     Amendment claim in the usual case is that the passage of
     time has frustrated his ability to establish his
     innocence of the crime charged. Normally, it is only
     after trial that that claim may fairly be assessed." Id.
     at 1552 (emphasis added).

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

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

convicted, from successfully demonstrating that the undue and

improper pre-indictment delay substantially and unfairly prejudiced

his ability to avoid that result.     Thus in United States v. Marion,

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

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

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

appellees' due process claims are speculative and premature."     See

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

to dismiss an indictment on speedy trial grounds does not indicate

that a like motion made after trialSQwhen prejudice can better be

gaugedSQwould also be denied.").

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

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

process pre-indictment delay prior to trial than would be required

    34
          Even statutes of limitation have been held not to create
a right not to be tried. See United States v. Weiss, 7 F.3d 1088
(2d Cir. 1993).    Although pre-trial dismissals on limitations
grounds are not uncommon, that is because the date of the offense
appears on the face of the indictment and the question is a purely
legal one; the reasons for the delay in indictment and whether it
is prejudicial are generally irrelevant to the limitations issue.

                                 18
after trial and conviction.       I believe that experience bears this

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

appellate decision sustaining such a pretrial dismissal, a 1976

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

v. Barket, 530 F.2d 189 (8th Cir. 1976).               There are no such

decisions since Lovasco.35        This silence speaks volumes.

       Townley provides a compelling example of how a strong pretrial

showing of substantial prejudice may ultimately dissolve in the

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

and his partner Owens were charged with mail fraud in connection

with inducing persons to purchase and invest in nonexistent vending

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

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

the machines would be produced and would be a valuable investment

for the purchasers.      We concluded that the requisite substantial

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

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

and Owens could not deliver the machine sold or that the scheme

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

substantial prejudice, however, because "the main thrust of the

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

misrepresentations made by Townley in the sale of the machines."

   35
          Shortly after Barket, another divided panel of the Eighth
Circuit again sustained the pretrial dismissal of three counts of
a four-count indictment on a due process, pre-indictment delay
basis.   United States v. Lovasco, 532 F.2d 59 (8th Cir. 1976).
However, the Supreme Court reversed. United States v. Lovasco, 97
S. Ct. 2044 (1977).

                                     19
Id. Townley also claimed prejudice from being unable to adequately

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

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

based on the approach taken by the government at trial:

          "Insofar as counsel was unable to corroborate
     Townley's testimony that (after he had discovered Owens'
     fraud) he had informed the financing company not to
     approve any further applications for credit by investor-
     purchasers, the government expressly stated it would not
     dispute Townley's testimony, and neither by argument nor
     evidence did it attempt to cast doubt upon this
     creditable act by Townley or upon his two customer-
     witnesses whose testimony tended to corroborate him. The
     government further made full disclosure of its files to
     Townley's attorney to aid him in the preparation of the
     defense." Id. at 585-86 (citation omitted).36

     Another instructive decision of ours in this respect is United

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

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

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

          "McGough's assertion of actual prejudice to his defense
     is based primarily upon the death of some six potential
     defense witnesses. Some of these witnesses, McGough claimed,
     would have testified as to firsthand knowledge of several of
     the transactions which entered into the government's
     calculation of the amount understated; the testimony of others
     might impeach government witnesses. . . . [T]he government
     asserted at the hearings that it had expected two of them to
     be government witnesses, rather than witnesses for the
     defense." Id. at 604.

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

trial court weighed the contradictory factual assertions before

stating   that   there   was   actual   prejudice,"   id.   at    604,   we

nevertheless did not remand for further findings in that respect,

    36
          We even observed that the government did not use but "had
available" a witness "who would have cast doubt on Townley's
exculpatory testimony." Id. at 586.

                                   20
but rather ordered that "the case is remanded for a prompt trial."

Id. at 605.      In this respect we quoted Marion, 92 S. Ct. at 466:

"'Events of trial may demonstrate actual prejudice, but at the

present time appellees' due process claims are speculative and

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

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

114 S. Ct. 1197 (1994);37 United States v. Rice, 550 F.2d 1364, 1369

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

     Evaluation of a due process claim of pre-indictment delay

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

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

knowledge of what the defense is able to produce.         It is settled

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

evidence    or   witnesses,   the   defendant   must   show   that   "the

information . . . could not otherwise be obtained from other

sources."    United States v. Beszborn, 21 F.3d 62, 67 (5th Cir.),

cert. denied, 115 S. Ct. 330 (1994) (reversing pretrial dismissal

based on due process claim of pre-indictment delay).           See also

   37
          In Robinson, the habeas petitioner claimed that the post-
indictment delay prejudiced him because he lost two witnesses, one
having died and the other no longer locatable, who "would have
corroborated the 'alibi' he presented at trial." We rejected this
claim, stating, "By the trial's end, however, the prosecution had
managed to blow so many holes in Robinson's alibi that the only
effect their testimony would have had would be to have transformed
Robinson's alibi from an incredibly tall tale to just a tall one."
Robinson, 2 F.3d at 571.
     38
          In Rice, in rejecting a pre-indictment delay claim, we
observed, concerning the defendant's claim (pretrial) that the
delay had allowed the government to procure evidence against him,
that at trial "[n]o such later acquired evidence was ever offered
against any of the defendants." Rice, 550 F.2d at 1369.

                                    21
United States v. Royals, 777 F.2d 1089, 1090 (5th Cir. 1985)

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

otherwise been obtained.").         Where the due process claim of pre-

indictment   delay     is   ruled     on    pretrial,    the   defense,    which

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

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

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

the incentive is precisely the opposite.           Then, if the evidence is

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

have been.

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

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

because of substantial prejudice from pre-indictment delay is

purely speculative.         For example, Crouch claims that the delay

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

the indictment having been returned in November 1992, and of

Tranquillo   Gubert,    who    died    in    September    1988,   both    former

directors of Delta Savings Association.           But Crouch does not claim

that either of these individuals knew anything of the charged

transactions, only that they would have testified that Gerjes,

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

board and Crouch.      Such testimony is of only attenuated relevance

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

board members were not available to supply this evidence.39                As to

     39
          Furthermore, a defendant claiming pre-indictment delay
must show that any claimed prejudice is attributable to that
portion of the delay that is undue. Cf. Walter v. Scott, 21 F.3d
22
Larry Tschearner, an officer of another involved entity, who died

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

claim that he could have impeached expected government witnesses

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

prejudice pretrial.

     Frye's     claim    respecting   the    lost    "Profit      Participation

Agreement"    is    deficient   because    there    is    no   showing   that    it

contained     helpful,    material    evidence      not    reflected     in     the

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

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

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

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

will produce evidence that there was a forgery.                 This relates to

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

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

1014 and 2.40      It is apparent that a conviction on count 18 can be

683, 688-89 (5th Cir. 1994) (evidence lost before delay became
excessive not lost due to excessive delay).     Here, there is no
basis for finding that, at the time of Gubert's death in 1988, the
pre-indictment delay had become undue delay.
     40
            The presently relevant part of count 18 is as follows:

          "C. The said false and fraudulent statements were
     contained in the purported application for the loan in
     the name of defendant MICHAEL J. FRYE's corporation,
     J.M.G. Financial Corporation, and accompanying purported
     minutes of a meeting of the directors of the defendant's
     corporation authorizing the defendant to purchase DELTA
     REO on behalf of the corporation, and were intended by
     the defendant to be included in the loan file of the
     sham, nominee loan in order to enable the making of the
     loan in connection with a 'cash for trash' transaction,
     to avoid loans to one borrower limitations and to avoid
     detection by DELTA officials and regulatory examiners of

                                      23
obtained without reference to whether a directors' meeting was

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

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

held.41

     In my view, there is simply insufficient evidence to establish

with the requisite degree of certainty that if a trial is held

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

suffered substantial, actual prejudice from any undue delay.

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

case should be taken en banc.

     the nature of the nominee loan.
          D.   The application and corporate minutes were
     materially false in that they purported to represent the
     intent of defendant MICHAEL J. FRYE that he and his
     corporation be held liable for repayment of the debt,
     when the defendants then and there well knew that
     defendant MICHAEL J. FRYE was a mere nominee borrower who
     believed himself and his company to have no actual
     liability on the note.      Additionally, the corporate
     minutes were false in that no such directors' meeting
     actually was held."
    41
          Moreover, there was no evidence that any expert had tried
and been unable to perform a handwriting analysis on the copy.
There was only the testimony of a nonexpert FBI special agent that
"there may be some handwriting analysis people that will work with
copies, but our people in our laboratory prefer originals." When
asked if they would work with copies, he said "I don't know. I
doubt it, but I don't know for sure. I don't think they would."

                                 24