United States Court of Appeals,
Eleventh Circuit.
No. 94-5183.
UNITED STATES of America, Plaintiff-Appellant,
v.
Michael D. FOXMAN, Defendant-Appellee.
July 11, 1996.
Appeal from the United States District Court for the Southern
District of Florida. (No. 87-6034-CR-WMH), William Hoeveler, Judge.
Before EDMONDSON, Circuit Judge, and FAY and GIBSON*, Senior
Circuit Judges.
EDMONDSON, Circuit Judge:
Today we deal with one aspect of Sunrise Savings & Loan
Association's failure: the indictment of former Sunrise chairman
Michael Foxman. Foxman, who left Sunrise in 1983, was indicted
with several of his former colleagues in 1993. Before trial, the
district judge dismissed the single count against Foxman. The
judge concluded that the indictment was for too long delayed. We
remand for application of the established legal standard to the
pre-indictment delay claim. We also remand for further examination
of Foxman's duplicity argument, which was raised below but was not
the basis for the dismissal of the indictment.
I.
Michael Foxman and other members of a Philadelphia-based law
firm formed Sunrise in 1979. Foxman was installed as Chairman, and
he selected Robert Jacoby to be president. Sunrise almost
*
Honorable Floyd R. Gibson, Senior U.S. Circuit Judge for
the Eighth Circuit, sitting by designation.
immediately embarked on certain courses of conduct which led to the
thrift's insolvency and to criminal charges (as well as civil
suits) against Sunrise's officers, lawyers and biggest borrowers.
The government says that Michael Foxman was involved in a
conspiracy to misapply Sunrise funds. The conspiracy is said to
have started with the diversion of money from Sunrise to Crusader
(a Pennsylvania savings and loan) and continued with a plan to
evade federal loans-to-one-borrower regulations. The
loans-to-one-borrower violations involved Sunrise's biggest
customers, William Frederickand Thomas Moye—large scale developers
and profligate spenders of borrowed money. (Persons concerned
about Frederick and Moye's relationship with Sunrise should see the
related case of U.S. v. Jacoby, 955 F.2d 1527 (11th Cir.1992).)
Foxman resigned as Chairman in 1983; he was not thereafter
involved in Sunrise's day-to-day operations.
Sunrise became insolvent in 1985. Regulators took over, and
a grand jury began investigating. In 1987, Frederick, Moye and
three former Sunrise officers (including Jacoby) were indicted.
Before trial, Frederick and Moye pleaded guilty. At trial, Jacoby
and another officer were convicted; and we affirmed their
convictions. See id. Then, the government granted Jacoby immunity
to force him to testify before the grand jury. In 1992, Jacoby
told the jury about the Crusader diversions. The government, which
had been investigating Sunrise for years, says this testimony was
the first link between Foxman and misuse of Sunrise funds.
In 1993, Foxman and four others were charged in a superseding
multi-count indictment. Count I, the only one implicating Foxman,
charged a single conspiracy composed of both the Crusader diversion
and the Frederick and Moye dealings. Foxman was charged with no
substantive counts because he left Sunrise before the Frederick and
Moye dealings and because prosecutions based directly on the
Crusader diversions became time barred back in 1988.
After hearing argument and receiving proffers from the
lawyers, the district judge—who had also presided over the Jacoby
trial—dismissed the indictment against Foxman because of
pre-indictment delay. The district judge also discussed Foxman's
argument that Count I was duplicitous: two separate conspiracies
were misjoined in a single count so as to come within the statute
of limitations.
II.
For purposes of this appeal, we assume that the Crusader
diversion and the loans-to-one-borrower matter could have been
proved to have been parts of a single conspiracy.1 So, we will not
discuss in detail Foxman's argument that the indictment should be
1
For an example of the government's charging conspiracy
where the statute of limitations barred substantive charges, see
U.S. v. Benson 846 F.2d 1338, 1340 (11th Cir.1988) (discussing no
duplicity claim).
Foxman's co-indictees went to trial and were convicted
of the Count I conspiracy. But, the district judge entered
a verdict of acquittal on Count I, concluding no reasonable
juror could find that the Crusader diversions and the
Frederick and Moye transactions were part of the same
conspiracy. This determination is being appealed by the
government in No. 96-4319, but the propriety of that ruling
is not before us now.
In this matter involving Foxman, the district
judge—although expressing support for Foxman's argument—did
not rely on the duplicity point. On remand, we instruct the
district judge to permit further development of the record
and to revisit this issue.
dismissed as duplicitous; and, the only issue we face is whether
the indictment of Foxman was lawfully dismissed on the ground of
delay. We review the dismissal of the indictment for an abuse of
discretion. See U.S. v. Dyal, 868 F.2d 424, 429-30 (11th
Cir.1989). But, the defendant bears a heavy burden in showing a
dismissal is appropriate. See U.S. v. Huntley, 976 F.2d 1287, 1290
(9th Cir.1992).
The limit on pre-indictment delay is usually set by the
statute of limitations. But, the Due Process Clause can bar an
indictment even when the indictment is brought within the
limitation period. See generally U.S. v. Marion, 404 U.S. 307,
323-27, 92 S.Ct. 455, 465-66, 30 L.Ed.2d 468 (1971) and U.S. v.
Lovasco, 431 U.S. 783, 788-91, 97 S.Ct. 2044, 2048-49, 52 L.Ed.2d
752 (1977). Under Lovasco and Marion and our applications of these
cases, see, e.g., U.S. v. Hayes, 40 F.3d 362, 365 (11th Cir.1994);
U.S. v. Benson, 846 F.2d 1338, 1340 (11th Cir.1988); and Stoner v.
Graddick, 751 F.2d 1535, 1541 (11th Cir.1985), for this dismissal
to have been proper, Foxman must have shown that pre-indictment
delay caused him actual substantial prejudice and that the delay
was the product of a deliberate act by the government designed to
gain a tactical advantage.
But, the district judge did not apply both parts of this
two-part test because he concluded that Doggett v. U.S., 505 U.S.
647, 112 S.Ct. 2686, 120 L.Ed.2d 520 (1992), altered the due
process analysis and permitted the dismissal of the indictment
whether or not the delay was the product of a deliberate act by the
government designed to gain a tactical advantage. Doggett,
however, is a Sixth Amendment case, and we agree with the Ninth
Circuit, see U.S. v. Bischel, 61 F.3d 1429, 1436 (9th Cir.1995),
that Doggett does not alter the law governing due process
challenges to pre-indictment delay.
For due process to have required dismissal, the delay must
have resulted in actual substantial prejudice to Foxman. We read
the order of the district court to say that he found that actual
substantial prejudice existed. An abuse of discretion exists on
this point only if this finding is clearly erroneous. U.S. v.
Huntley, 976 F.2d 1287, 1290 (9th Cir.1992). Given the number of
Foxman's best witnesses who died between 1983 and 1993 (and that
the statute of limitations for substantive charges against Foxman
expired in 1988), we cannot say the district judge was clearly
wrong. See U.S. v. Mills, 704 F.2d 1553, 1557 (11th Cir.1983)
(death of witness can lead to substantial prejudice). Most of the
evidence in the case against Foxman was to be testimonial. And,
Foxman—unlike other defendants—was not under active investigation
in the 1980's; therefore he had little incentive to preserve
evidence.
But, substantial prejudice from delay, standing alone, does
not violate due process. See id. The delay must also be the
product of a deliberate act by the government designed to gain a
tactical advantage. Our review of the record suggests support
exists for a finding that at least part of the delay in this case
is of this kind.2 The government believed that Jacoby would
2
We have said that delay which is the product of "bad faith"
government acts will satisfy this test. See Stoner, 751 F.2d at
1541 (but also alternatively holding that defendant suffered
implicate others when he was forced to testify; and the government
waited until Jacoby's own convictions were affirmed to immunize
him. This decision delayed the indictment of Foxman. And, this
delay might be the product of prosecutorial conduct designed to
insufficient prejudice from delay); Benson, 846 F.2d at 1343
(but also observing that prejudice in case "does not rise to
constitutional proportions"). In context, we think those cases
used the words "bad faith" to mean that the government acted to
delay an indictment, hoping that the delay—in and of itself—would
prejudice the defense. In "bad faith" cases, the government
intentionally acts to delay; and the tactical advantage sought
is the prejudice to the defendant which the government
anticipates will flow from the delay.
But, bad faith in this sense or in the sense of a
subjective sinister motive is not critical to a due process
violation for preindictment delay. The critical element is
that the government makes a judgment about how it can best
proceed with litigation to gain an advantage over the
defendant and, as a result of that judgment, an indictment
is delayed. Then, the question becomes whether that delay
caused the defendant actual substantial prejudice.
The government, as litigating party, might pursue
tactical advantages other than prejudice directly caused by
delay. We think intentional government acts designed to
obtain a tactical advantage which only incidentally cause
delay have never been ruled out as a potential basis for due
process violations. The main point is showing acts done
intentionally in pursuit of a particular tactical advantage:
delay (and the prejudice directly caused by the delay) need
not necessarily be the tactical advantage sought.
We also observe that many delays in obtaining an
indictment would not be "tactical"—a word which we think
inherently includes the concept of intentionally maneuvering
for an advantage at trial. For example, not every delay
which is the result of a need for further investigation
gives rise to a due process violation. Hayes, 40 F.3d at
365. (But where an investigation is itself delayed by the
government for tactical reasons, the fact that an
investigation was involved might be no bar to a due process
violation.) And, some delays are not the product of
"deliberate action by the government." For example, where
the record shows no reason for the delay (or where delay is
due to simple negligence), no due process violation exists.
See Stoner, 751 F.2d at 1543 and Benson, 846 F.2d at 1342-
43.
obtain a tactical advantage: it seems the reason for the delay
might have been the prosecutor's belief that Jacoby would be a
better witness against those he implicated once his convictions
were affirmed.3 If this motivation was the reason for the delay,
the litigation strategy (that is, the pursuit of the advantage of
Jacoby having already been finally convicted) seems to have
inherently involved the risk that Jacoby—when he ultimately was
immunized after his appeal—would reveal misdeeds prior in time to
those the government anticipated Jacoby would reveal. We would
have little difficulty in permitting the foreseeable consequences
of a deliberately chosen litigation strategy to be visited upon the
government.
But, a problem exists with our concluding that the government
delayed the indictment to gain a tactical advantage over Foxman.
The government tells us that the first evidence against Foxman was
Jacoby's testimony. If this representation is true, we cannot say
as a matter of law that this fact would necessarily prevent the
conclusion that the government intentionally acted to obtain a
tactical advantage over Foxman. But, it would mean that we would
need detailed findings in support of such a conclusion. Facts
which might be important to determining whether the government
intentionally acted to gain a tactical advantage over Foxman could
be whether the government had some reason to believe Foxman would
be implicated by Jacoby regardless of when he was immunized or even
3
We also note that the district judge in this case is
familiar with all the Sunrise prosecutions and has remarked on
certain "excesses" or "unchecked enthusiasm" on the part of the
government.
if he was not immunized. Another factor might be whether the
government was "willfully blind" to Foxman's involvement before
they heard from Jacoby. Also important could be whether a
government trial strategy was designed to obtain a tactical
advantage over all persons Jacoby implicated, with Foxman simply
being one of those persons. Findings about delays due to
intentional acts to obtain a tactical advantage other than the act
of waiting to immunize Jacoby could also be important. We need a
more detailed record and more detailed findings.4
Here, the district judge relied on Doggett; he made no
findings about the reasons for the delay. Because of this
circumstance, we think we must vacate the order of dismissal and
remand this case. The parties need to create a record which would
enable the district judge to determine what, if any, delay was the
product of deliberate acts by the government to gain a tactical
advantage over Foxman. And, the district court must determine
whether this delay caused Foxman actual substantial prejudice. We
also believe that the duplicity of Count I remains in issue; so,
as discussed in note 1, we also instruct that the duplicity issue
be revisited by the district judge and the parties.
VACATED and REMANDED.
4
We also observe that dismissing an indictment under the Due
Process Clause for pre-indictment delay is rare. In fact, so far
as we can tell, we have never concluded that such a dismissal was
appropriate. We are not surprised by this—the statute of
limitations protects defendants in almost every case. But, on
the record before us now, we think it might be that the
limitations period has failed to protect Foxman from an
indictment which never should have issued. But, before we would
affirm such a determination, we would need detailed findings
supported by a well-developed record.