dissenting in part:
I would hold that the sanctions imposed upon Noble and Moorgate for discovery violation were excessive and unlawful. In my opinion, ordering that the plaintiffs complaint be taken as established as a Rule 37(b)(2) sanction was an abuse of discretion. Moreover, I conclude that the district court erred in failing to provide adequate warning to the defendants and failing to consider lesser alternative sanctions. On a separate point, I believe that the order denying Noble and Moorgate the opportunity to use any of their assets for purposes of attorneys fees was erroneous.
In United States ex rel. Wiltec Guam, Inc. v. Kahaluu Construction Co., we identified “orders taking the plaintiffs allegations as established and awarding judgment to the plaintiff on that basis” and “dismissal of the plaintiffs action” as the most severe penalties that can be imposed against a defendant and plaintiff, respectively. United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 603 n. 5 (9th Cir.1988). Entering a default judgment against a defendant as a discovery sanction precludes him from defending against the allegations raised against him. This court has refrained from imposing this very severe penalty in all but *776the most extreme cases. Id. at 603; Wanderer v. Johnston, 910 F.2d 652, 653 (9th Cir.1990) (finding “[t]he severe sanction of default was justified by the defendants’ repeated and inexcusable obstruction of every type of discovery attempted by the plaintiffs”). While I do not condone Noble and Moorgate’s conduct during the course of pretrial proceedings, the penalty should fit their transgression. Noble and Moorgate’s conduct was not so extreme as to warrant the ultimate penalty.
Noble and Moorgate’s conduct — failing to provide a representative who did not invoke the Fifth Amendment privilege — involved none of the extreme behavior for which we have affirmed default judgments against other defendants. See, e.g., Wanderer v. Johnston, 910 F.2d 652, 653 (9th Cir.1990) (affirming default judgment against defendants who “exhibited complete indifference to [the court’s] warnings, the orders of th[e] court and their discovery obligations, thereby thwarting plaintiffs’ every attempt to secure basic, legitimate discovery”); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 916 (9th Cir.1987) (affirming default judgment entered against defendant for committing perjury during depositions and filing false pleadings with the court); Shearson Loeb Rhoades, Inc. v. Quinard, 751 F.2d 1102, 1103 (9th Cir.1985) (affirming default judgment entered against defendant for “willful and deliberate disobedience of a discovery order, willful concealment of evidence, and attempted fabrication of false evidence”).
“Even assuming that the conduct of [Noble and Moorgate] meets the extreme circumstances and willfulness requirements,” a review of the five Wanderer factors demonstrates that “the sanction imposed by the district court was not in the ‘acceptable range’.” Kahaluu, 857 F.2d at 603 (citing Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir.1987)). We have reserved the default judgment sanction for defendants who made discovery of any type virtually impossible, particularly defendants who faded to produce documents. Relying upon our holdings in Hyde & Drath v. Baker, 24 F.3d 1162 (9th Cir.1994), and Adriana v. Thoeren, 913 F.2d 1406 (9th Cir.1990), cert. denied, Lewis & Co. v. Thoeren, 498 U.S. 1109, 111 S.Ct. 1019, 112 L.Ed.2d 1100 (1991), the majority suggests that the failure to appear for scheduled depositions is sufficient reason to find prejudice. However, we found prejudice in Hyde because
the ... case resemble[d] Adriana International Corp. v. Thoeren, where “the repeated failure of [plaintiffs] to appear at scheduled depositions compounded by their continuing refusal to comply with court-ordered production of documents constituted an interference with the rightful decision of the case.”
Hyde, 24 F.3d at 1167 (citations omitted) (emphasis added). Noble and Moorgate did not engage in comparable conduct. Their failure to appear at depositions was not compounded by a failure to produce documents. “Delay alone has been held to be insufficient prejudice,” whereas “[f]ailure to produce documents as ordered ... is considered sufficient prejudice.” Adriana, 913 F.2d at 1412.
In addition, as we explained in Kahaluu, the district court abuses its discretion if it fails to consider less drastic alternative sanctions and to warn the defendants of the possible consequences, except in “exceptional” cases or cases involving “egregious circumstances.” Kahaluu, 857 F.2d at 604, 605. We have said expressly that in most cases warranting the imposition of serious sanctions, “the district court must consider less severe alternatives and discuss them if it elects to dismiss.” Id. Because, this is not the type of unusual case that justifies our abandoning our ordinary principles, the district court was obliged to give adequate warning to Noble and Moorgate and to consider lesser sanctions before precluding the defendants from opposing the plaintiffs claim.
“In some cases, the fact that the district court actually implemented alternative sanctions prior to dismissal may be enough to satisfy the ‘consideration of alternatives’ requirement.” Id. This is not such a case. In Kahaluu we found a $300 sanction imposed *777against defendants for failing to comply with a document production request was insufficient to fulfill the district court obligation to consider alternatives. Id. Likewise, the $500 sanction imposed against Noble and Moorgate for failing to provide a representative who would not invoke Fifth amendment privilege at deposition does not satisfy that requirement.
In short, the record indicates no consideration by the district court of the adequacy of lesser sanctions and no warning to the defendants that judgment might be awarded for [the Commission].
Kahaluu, 857 F.2d at 605. By precluding Noble and Moorgate from defending against the Commission’s claim, “the district court in effect deprived them of all of their rights as to [this] action.” Id. “This harsh a penalty was not warranted.” Id.
Attorney Fees
District courts do have discretion to regulate the payment of attorneys fees from assets that are frozen pending trial and to forbid the payment of some fees out of those assets. However, we have never previously held, as the majority appears to believe we have, that a flat prohibition against the payment of all attorneys fees, including those essential to provide a defense, is within a district court’s discretion. To the contrary, in previous eases we have told the district courts to establish rules governing the use of frozen assets for attorneys fees and have described how and under what circumstances a district court may go about limiting access to frozen funds for payment of attorneys fees. See, e.g. FTC v. World Wide Factors, Ltd., 882 F.2d 344, 348 (9th Cir.1989). Moreover, as one of the cases we have approved states specifically, district courts should establish procedures that will permit the payment of reasonable attorneys fees. FSLIC v. Dixon, 835 F.2d 554, 565 (5th Cir.1987).
The cases cited by the majority simply do not support its unprecedented holding. The district court in FSLIC v. Ferm, 909 F.2d 372, 375 (9th Cir.1990), did not institute a flat prohibition against the payment of any attorneys fees out of frozen assets. Instead, that court only required that attorneys fees be monitored in camera to ensure their reasonableness. Likewise, in FTC v. World Wide Factors, Ltd., 882 F.2d 344, 347, 346 (9th Cir.1989), we did not hold that a district court could forbid payment of all attorneys fees. Our holding in World Wide Factors was only that it is within a district court’s discretion to place a limit on the hourly rate paid to the defendants’ attorneys from frozen funds. Id. at 348. Finally, CFTC v. Co Petro Mktg. Group, Inc., 700 F.2d 1279, 1284 (9th Cir.1983) (Co Petro II) has nothing to so with the district court’s authority to freeze assets pending trial or the right of a party to use its assets for attorneys fees prior to or during the course of the trial. In Co Petro II, counsel received funds from the defendants after their clients had lost the trial on the merits and after they had been prohibited by a permanent injunction from using those funds for any purpose.1 Likewise, the *778last ease cited by the majority opinion deals with a prohibition of the payment of attorneys after the defendant lost on the merits. CFTC v. Morse, 762 F.2d 60, 61 (8th Cir.1985) (“appeal from entry of a permanent injunction”).
In World Wide Factors, cited by the majority, we did say in dictum:
Courts regularly have frozen assets and denied attorney fees or limited the amount for attorney fees. See Commodity Futures Trading Comm’n v. Co Petro Mktg. Group, Inc., 700 F.2d 1279 (9th Cir.1988). Any doubt as to the constitutionality of freezing assets and precluding entirely their use for payment of attorney fees in circumstances even more extreme than this case have now been resolved by the Supreme Court’s recent decision in United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) and Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646, 105 L.Ed.2d 528 (1989).
World Wide Factors, 882 F.2d at 347 (parenthetical explanation omitted). While it is correct that “[ajppellate court decisions ... have consistently permitted district courts to limit or to review the amount payable to attorneys from frozen assets before a final judgment on the merits has been reached,” Farm, 909 F.2d at 374, district courts have only been permitted to forbid payment of all attorney fees in one particular class of cases. In support of our overbroad dictum in World Wide Factors, we properly cited the two recent Supreme Court eases that do permit courts to totally forbid the payment of attorneys fees from disputed funds. Both cases involve criminal defendants and forfeiture statutes.
In Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646, 105 L.Ed.2d 528 (1989) and United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989), the Supreme Court held that criminal defendants have no Sixth Amendment right to pay their attorneys fees with funds that are subject to being forfeited. These cases do not purport to determine the extent of the district court’s discretion over frozen assets under other circumstances or in general. Nor is their rationale applicable to proceedings of the type before us. The Supreme Court cases set forth the reasons why criminal defendants do not have a constitutional right to pay their attorneys fees from forfeited or forfeitable funds. They do not explain why a defendant in a civil proceeding whose assets are not subject to forfeiture should be prohibited from using those assets to defend himself. The considerations affecting the two questions are obviously quite different.
This court has never before approved a total prohibition against the use of frozen assets for attorneys fees. Certainly, we have never done so as part of ancillary relief under section 6c of the Commodities Exchange Act, or in connection with any other civil case. The majority offers no explanation for why we should do so now. One of the cases relied on by the majority cites the Fifth Circuit’s decision in FSLIC v. Dixon, 835 F.2d 554, 565 (5th Cir.1987). That case, however, far from forbidding the payment of attorneys fees out of frozen assets, held that “allowance must be made to permit each defendant to pay reasonable attorneys’ fees if he is able to show that he cannot [otherwise] pay them.” Granted, we might conclude that the burden is on the defendants to show they will only be able to hire an attorney if assets subject to the freeze order are released. Dixon, 835 F.2d at 565. Nevertheless, at the very least, the district court in this case was obligated to assess whether or not the defendants needed to use the frozen assets to pay reasonable attorneys fees rather than categorically barring them from using any of *779their assets without even making an appropriate inquiry.
The purpose behind freezing a defendants’ assets is “to ensure that such assets are not squandered by one party to the potential detriment of another,” Ferm, 909 F.2d at 374, not to prevent defendants from mounting a defense at all.
If, out of concern for preserving funds for ultimate distribution to defrauded customers, the district court wishes to limit the amount by which the frozen funds may be invaded for payment of attorney fees, it should set a maximum total sum which may be withdrawn or it should establish the minimum size to which the otherwise frozen assets may be reduced based upon appropriate findings.
World Wide Factors, 882 F.2d at 348. The majority’s concern that Noble and Moor-gate’s frozen assets fell short of the amount needed to compensate their customers is commendable. However, “this suit was brought to establish the defendants’ wrongdoing; the court cannot assume the wrongdoing before judgment in order to remove the defendants’ ability to defend themselves.” FSLIC v. Dixon, 835 F.2d at 565. Some kind of allowance should have been made to permit Noble and Moorgate to pay reasonable attorney’s fees associated with their defense.
. The majority’s reliance on this case is understandable because our opinion appears at times to confuse the terms preliminary and permanent injunctions. In Co Petro (II), the law firm representing Co Petro appealed a district court order finding that it had violated a permanent injunction against the transfer of any of Co Petro’s assets and ordering the return of $60,000 that the law firm had received the day after the district court issued its ruling on the merits against Co Petro. Co Petro (II) plainly and accurately describes the nature of the appeal and the issue before the court as follows:
Appellant Loo, Merideth & McMillan appeals from a district court order declaring that appellant had violated a permanent injunction issued by the district court against any transfer of the assets of Co Petro Marketing Group, Inc. ("Co Petro”). The district court ordered appellant to return $60,000 it had received from Co Petro.
Appellant contends (1) that the district court did not have jurisdiction to issue the order, (2) that the district court proceeding was automatically stayed under section 362 of the Bankruptcy Reform Act of 1978, 11 U.S.C. § 362 (Supp. IV 1980), and (3) that receipt and deposit of the $60,000 by Appellant did not violate the permanent injunction.
Co Petro II, 700 F.2d at 1280 (emphasis added). The confusion stems from the fact that the hearing for the preliminary injunction was consolidated with the hearing on the merits. For this reason, apparently, our opinion sometimes refers *778to the permanent injunction against "transferring or dealing in any manner whatsoever with the assets of Co Petro” as a preliminary injunction. In any event, in Co Petro II, there was no question raised on appeal with respect to whether the district court had the discretion to issue an order prohibiting payment of any or all attorneys fees. The only issues raised were whether the district court was deprived of jurisdiction to proceed by virtue of the Bankruptcy Act, whether the proceedings were automatically stayed, and whether a violation of the injunction had occurred.