United States v. Crouch

IN THE 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
May 30, 1996

Before POLITZ, Chief Judge, KING, GARWOOD, JOLLY, HIGGINBOTHAM,
DAVIS, JONES, SMITH, DUHÉ, WIENER, BARKSDALE, EMILIO M. GARZA,
DeMOSS, BENAVIDES, STEWART, PARKER and DENNIS, Circuit Judges.

GARWOOD, Circuit Judge:

In this prosecution for alleged savings and loan offenses, the

district court, prior to trial, dismissed the indictment against

Guy Crouch III (Crouch) and Michael Frye (Frye) for pre-indictment

delay, notwithstanding that the statute of limitations had not run.

United States v. Crouch, 835 F.Supp. 938 (S.D. Tex. 1993). The

government appeals.

The district court, following a hearing before a magistrate

judge, concluded that the delay was sufficiently extensive “to
constitute substantial presumptive prejudice” and was also shown to

“have resulted in some actual prejudice.” Id. at 943.

Characterizing the government’s reasons for the delay as

essentially “insufficient personnel available to investigate or

properly prepare,” the district court concluded that such reasons

were “at best, entitled to only slight weight in the balance of due

process considerations” and did not outweigh the “prejudice, actual

and presumptive.” Id. at 946. Although opining that the delay

“certainly smacks of negligence,” the court determined that “the

record, in its present form, will not justify a finding of bad

faith, but because of [discovery and evidentiary] limitations

imposed by . . . the Magistrate Judge, it cannot be ruled out.”

Id. at 943 & n.6.

A divided panel of this Court affirmed the dismissal of the

indictment. United States v. Crouch, 51 F.3d 480 (5th Cir. 1995).

The panel majority recognized that for pre-indictment delay “the

triggering prejudice must be actual, not presumptive,” but

concluded that the district court’s finding of actual prejudice was

adequately supported. Id. at 484-485. Relying on United States v.

Townley, 665 F.2d 579 (5th Cir.), cert. denied, 102 S.Ct. 2305

(1982), the panel majority further held that no showing of

prosecutorial bad faith was required, and that instead the reasons

for the delay would be balanced against the extent of the

prejudice. Crouch at 483. The panel majority held that the

government’s reasons——”essentially, lack of manpower and the low

priority which this investigation was assigned”——were “insufficient

2
to outweigh the actual prejudice to Crouch and Frye.” Id. at 485.

It concluded that “requiring Crouch and Frye to stand trial now

would be fundamentally unfair and violative of due process.” Id.

We granted the government’s suggestion for rehearing en banc.

We now reverse the district court’s order dismissing the

indictment. We hold that where the indictment is not barred by the

statute of limitations, dismissal for pre-indictment delay requires

an appropriate showing not only of prejudice but also that the

prosecution purposely delayed the indictment to gain tactical

advantage or for other bad faith purpose. We further hold that the

present record does not support a finding of the requisite actual,

substantial prejudice——as opposed to potential prejudice——to justify

dismissal prior to trial. “Events of the trial may demonstrate

actual prejudice, but at the present time appellees’ due process

claims are speculative and premature.” United States v. Marion, 92

S.Ct. 455, 466 (1971).

BACKGROUND

Offenses Charged

The instant indictment was returned November 12, 1992. It

contains 19 counts. Crouch is named a defendant in all counts, and

Frye is named a defendant in counts 1, 2, 8, 13, and 18. The only

other defendant charged in the indictment——Kerry Shawell, charged

in counts 1, 2, 9, 14, and 19——had pleaded guilty, and agreed to

cooperate with the government, before the hearing on the motions of

Crouch and Frye to dismiss for preindictment delay. The indictment

concerns seven loans, all of which closed June 28, 1985, made by

3
Delta Savings Association (Delta), a federally-insured savings and

loan association located in Alvin, Texas. Crouch was the Chairman

of the Board of Delta, and a member of its loan committee, from

approximately January 1985 until resigning in September 1986. He

was also Delta’s attorney, and was half owner, with his father, of

the title company at which the loans in question, and apparently

many other Delta loans, closed. The seven loans included: two

(for $915,000 and $1,439,000) to Robert Ferguson, a real estate

broker and investor, and his company, Ferguson C&D, Inc., to buy

from Bankers Savings and Loan Association (Bankers), a federally-

insured savings and loan association located in Galveston, Texas,

certain real estate on which Bankers had foreclosed (known as real

estate owned, or REO); three loans (for $505,780, $825,300, and

$1,200,000) to Mark Connally (Connally), two of which were for the

purchase from Ferguson of the REO Ferguson had purchased from

Bankers and one of which was an operating capital loan; one

$3,950,000 loan to Frye, a real estate investor and developer, and

his company, J.M.G. Financial Corporation (J.M.G.), to buy from

Delta a Delta REO tract; and one $1,250,000 loan to Shawell and his

company, Kerry Shawell Interests, Inc., to buy from Delta another

Delta REO tract. The indictment charges false entries, 18 U.S.C.

§ 1006; false statements, 18 U.S.C. § 1014; misapplication of

funds, 18 U.S.C. § 657; bank fraud, 18 U.S.C. § 1344; and

conspiracy under 18 U.S.C. § 371 to commit those offenses.

The conspiracy and the bank fraud (executing and attempting to

execute “a scheme and artifice to defraud Delta”) were charged in

4
counts one and two, respectively, and allegedly lasted from “about

December, 1984 and continuing through on or about August 1985.”

The remaining counts are substantive counts, and are alleged to

have been committed “on or about June 28, 1985" in counts 3 through

14, and “between June 1985 and August 1985" in counts 15 through

19. Counts 3 through 7 charge Crouch alone with section 657

misapplication of Delta funds as to, respectively, the two loans to

Ferguson and the three loans to Connally. Count 8 charges Crouch,

aided by Frye, with section 657 misapplication as to the Frye loan;

and count 9 charges Crouch, aided by Shawell, with section 657

misapplication as to the Shawell loan. Counts 10, 11, and 12

charge Crouch alone with section 1006 false entries as to,

respectively, each of the three loans to Connally. Count 13

charges Crouch, aided by Frye, with section 1006 false entry as to

the Frye loan; and count 14 charges Crouch, aided by Shawell, with

false entry as to the Shawell loan. Counts 15, 16, and 17 charge

Crouch alone with section 1014 false statements as to,

respectively, each of the three Connally loan applications. Count

18 charges Crouch and Frye with section 1014 false statements as to

the Frye loan; and count 19 charges Crouch and Shawell with section

1014 false statements as to the Shawell loan.

While certain aspects of the government’s theory of the case

are not entirely clear, it is evident that the loans to Connally,

Frye, and Shawell are all alleged to be nominee loans, with Frye

and Shawell being nominees for Ferguson, and Connally also, at

least to some extent, being a nominee for Ferguson. It may further

5
be the government’s theory that Connally was also to some extent a

nominee for the partnership of Ben Barnes and John Connally. The

nominee status was in each instance allegedly at least in part for

the purpose of avoiding loans to one borrower limitations,

particularly as to Ferguson. The section 1006 false entry and

section 1014 false statement counts are predicated on falsely

identifying the particular nominee borrower (Connally, Frye, and

Shawell) as being the true borrower.

Count one, the conspiracy count, appears to essentially allege

the counts 3 through 19 substantive offenses as objects of the

conspiracy. It alleges that Crouch, Frye, and Shawell conspired

with each other and “with other individuals, both known and

unknown.” In response to a motion for bill of particulars, the

government identified Carl Gerjes——who was president of Delta until

he was discharged sometime during May or June 1985——and Ferguson as

“[t]he unindicted co-conspirators.” The government also stated

that “arguably” the term “may also cover” Barnes and Mark

Connally.1 The conspiracy count also refers to activities in

furtherance of the conspiracy by “Delta insiders,” and the response

to the bill of particulars states that “Delta insiders” refers to

Gerjes, Cholakian, a Delta officer who succeeded Gerjes as

president in May or June 1985, and Erskin, another Delta officer.

The government’s general theory of the case is set forth in its

response below to Frye’s motion to dismiss for failure to charge an

1
The same grand jury, consistent with the government’s
recommendation, had declined to indict Barnes and Mark Connally.

6
offense, as follows:

“1. Between December, 1984 and June 28, 1985,
defendant Crouch, Robert B. Ferguson and others devised
a scheme to rid Delta’s records of various tracts of real
estate acquired by the thrift through foreclosure. Part
of the scheme required that Ferguson provide persons
willing to pretend to be bona fide buyers of the property
and to sign loan contracts purporting to evidence their
purchase of the Delta real estate.
2. In furtherance of this plan, Ferguson caused
defendants Frye and Shawell to prepare loan applications,
personal financial statements, board of directors’
minutes, corporate resolutions and other documents
portraying the defendants as intended purchasers of Delta
real estate located near Houston, Texas. Additionally,
the sham buyers signed Delta loan contracts purporting to
finance the purchases in their name. It was the
understanding of all parties that the named buyers were
mere nominee borrowers on behalf of Ferguson. All
parties to the scheme were aware that the use of nominee
borrowers was necessary in order to avoid loan to one
borrower limitations.
3. In furtherance of the scheme, defendant Frye
submitted to Delta the documents described above and
signed as borrower on the loan supporting the
transaction. The wording of the documents was such that
they represented to persons unfamiliar with the scheme
defendant Frye’s intent to buy the real estate and to be
held personally liable on the real estate loan for the
purchase. The documents omitted any declaration that the
loan was a nominee loan intended to benefit Ferguson,
defendant Crouch and others.
4. Defendant Frye participated in this scheme
because he anticipated preferential treatment by Delta in
future transactions. Additionally, defendant Frye
believed that Ferguson was acquiring Bankers Savings and
Loan Association of Galveston and that he -- Frye --
would receive preferential treatment there, as well.”

At the July 1993 hearing before the magistrate judge, the

government further explained its theory as follows:

“. . . as this deal was done, only Mr. Crouch was aware
of everyone’s identity and involvement. Mr. Ferguson was
purchasing a savings and loan in Galveston. He was
attempting to swap REO properties from Banker’s to Delta.
Delta had some REO properties it needed to get rid of and
they were going to swap or sell their properties to
Banker’s through the person of Robert Ferguson.

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 Sir, Mr. Ferguson knows that properties were to be
swapped. He did not know who was purchasing the
properties until just before the closing. He didn’t know
that Ben Barnes and Mark Connally would be brought in.
We have evidence that he did not know that Mark Connally
was to be substituted in as a nominee until literally at
the closing.

There is no evidence to suggest that Ben Barnes or
Mark Connally ever heard the names Kerry Shawell or
Michael Frye. They only knew that there were loans that
they were involved in and certain circumstances.

All of these loans took place on the same day. All
of them were either closed at Defendant Crouch’s office
in Alvin; or with regards to Mr. Frye and Shawell, Robert
Ferguson actually took those documents to those
individuals and had them sign everything and had it
notarized.”

At this hearing, the government also essentially admitted it

had no direct evidence of Frye’s knowledge or involvement other

than in respect to counts 8, 13, and 18, each relating to the

$3,950,000 loan to him. To show Frye knew he was a nominee

borrower, the government stated it would rely on expected testimony

of Ferguson, Gerjes “and others, Mr. Shawell,” admissions Frye made

in July 1986 to Federal Home Loan Bank Board (FHLB) examiner Mims,

and 1986 “letters of Mr. Frye and his attorney” to Delta stating

that he “purchased the property as an accommodation to Mr. Crouch

and Mr. Ferguson.”

Another aspect of the government’s theory of the case is

reflected by Gerjes’ testimony on cross-examination by the

government at the hearing before the magistrate judge.2 Gerjes

stated that in his capacity as Delta’s president he had negotiated

and dealt with Barnes and Mark Connally in regard to the charged

2
Gerjes was called as a witness by Frye at the hearing.

8
Mark Connally loans as part of an effort to rid Delta of REO. He

did not recall in this regard “any one person directing me” or

“anyone saying, you definitely do this or you definitely do that,”

or “that anyone specifically assigned me” that responsibility.

Typically, he would “report back to a loan committee meeting and

tell them of my findings” and “about what” he was “negotiating with

Barnes/Connally.” Crouch was on the loan committee. Gerjes also

testified that he was not at the June 28, 1985, loan closings

because Crouch had fired him as Delta’s president about a month

earlier, although he remained “technically on the rolls of Delta

for some time after that.”

In its response to the motion for bill of particulars, the

government described “Defendant Crouch’s obtained benefit” from the

various charged offenses as follows:

“His law firm earned legal fees. His title company
earned title related fees. He earned fees and bonuses
related to his board of directors position. His actions
kept the federal regulators from immediately taking over
the institution which would have caused any stock owned
by Crouch and his family to be worthless.”

The record suggests that Crouch personally owned about 5% of

Delta’s stock. His father, who was not on the board at any time

during or after 1985, owned about 34% of the stock, and another

some 34% was owned by board member Gubert, who preceded Crouch as

chairman.

Investigation

Delta was apparently placed under state supervision and

control in May 1986, as reflected in a report of examination

prepared by FHLB examiner Mims, a copy of which is attached as an

9
exhibit to Crouch’s motion to dismiss for pre-indictment delay.3

Delta was apparently completely taken over by the authorities in

September 1986. The report attached to Crouch’s motion concerns

many aspects of Delta’s operations and financial condition, and

includes specific questioning of certain loans, including the seven

loans at issue here, as well as, among others, certain unrelated

loans to one Carl Vaughan. The report concludes, among other

things, that “[a]ll aspects of the JMG and Shawell transactions

indicate that JMG and Shawell were acting as nominees for Ferguson

C&D, Inc.,” that there were “willful violations of the loans-to-

one-borrower limitation” with respect to Ferguson, among others,

that review of title company and Delta records pertaining to the

seven loans reflect “an apparent attempt by the association and

borrowers to misrepresent material facts,” that “certain aspects of

the transaction appear to fall within the purview of Title 18,

United States Code Section 1001," and that “[t]he examiner

concludes that the Loan Committee was aware of the material

violations of the loans-to-one-borrower limitations.” This report

likewise reflects the following statements by then Delta president

Cholakian:

“In response to the loan underwriting deficiencies
uncovered during the examination, President Terry
Cholakian stated that former Managing Officer Carl Gerjes
and former Senior Vice President of Real Estate Lending
W.A. Erskine had little regard for loan underwriting
regulations. According to Ms. Cholakian, Messrs. Gerjes
and Erskine were primarily concerned with closing loans

3
Although this document states that it is a report of
“Examination As Of March 10, 1986,” it refers to events occurring
well after March 1986.

10
 now and worrying about regulations later.

. . . President Cholakian remarked that prior to July
1985, loans were closed outside of the Loan Committee.
Messrs. Gerjes and Erskine agreed to loan commitments
first and then presented the details to the full
committee, at which point all committee members were
expected to sign.

Loan Committee procedures have changed since July 1985.
According to Ms. Cholakian, all loans are now approved
during committee meetings, and underwriting guidelines
and procedures have been established.

. . . .

President Cholakian provided the following statement with
regard to the transactions involved with the
aforementioned two escrow closings [Frye and Shawell]:

‘In addressing the situation on the Ferguson direct loans
and nominee loans, I have informed you and your staff
that neither I, nor any other member of current
management, has all of the facts surrounding this
arrangement. This was put together by the former
president, Carl Gerjes, and I have not been able to find
any written documentation or clarification of the
transaction. I have also not been able to find any
written agreements that outline the transaction and
expected actions of the parties.

‘It has become clear to us, here now, that JMG and
Shawell are nominees for Ferguson. We had to deduce that
from the subsequent actions and responses of JMG and
Shawell on requests for financial statements and interest
payments. . . .’”

In August 1986, the FHLB examiner sent “criminal referrals” to

the FBI and the United States Attorney with respect to Delta

concerning at least these seven loans and the Carl Vaughan

transactions, and at least the former implicated Crouch and Frye,

among others, though Crouch’s name was not among the target names

listed on the cover sheet (whether Frye’s was is not stated). FBI

special agent Kettler, in charge of the Delta investigation during

most of the time thereafter, testified that such a referral was

11
“generally a summary of an event or a transaction that the examiner

feels that needs to be looked into as far as possible criminal

involvement or needs some work for a criminal investigation.”

Kettler testified he worked on the matter off and on since then,

but not on a concentrated basis until 1991. In April 1987 Kettler

received another FHLB criminal referral in reference to

“bonuses”——apparently some form of kickbacks——paid Gerjes (and also

involving Cholakian) in 1983 and 1984. He focused on this because

of the five-year statute of limitations.4 Gerjes was indicted for

these “bonus” offenses in the summer of 1989, and was tried and

convicted of them later that year. Crouch’s father testified

against Gerjes at this trial, and though Crouch did not testify, he

apparently had been subpoenaed by the government and was ready to

testify to identify records. In July 1987, Kettler received still

another FHLB criminal referral concerning Delta, this time also in

relation to certain other matters not involved in this case. In

August 1986 in the Galveston area of the Southern District of

Texas——the locus of the offenses at issue——there were only three FBI

agents, and there was no financial analyst or similarly skilled

person. Of the three agents, one worked exclusively on drug cases.

Kettler and the other agent were responsible for all other federal

offenses. A fourth agent was added in late 1987, but she was soon

reassigned to Houston and did not return until the summer of 1988.

During this time there were seven financial institutions, including

4
The statute of limitations was extended to ten years
effective August 1989, except for offenses as to which the statute
had run prior to that time. 18 U.S.C. § 3293.

12
Delta, under investigation by these two agents. There were also

many other cases, including the “McConnell case,” which came into

Kettler’s office about three months after the first Delta referral

and which he described as “about the largest white collar fraud

that we had in the Houston division.” Kettler worked “exclusively”

on that case for “six months or so.” The disappearance of a young

girl and a case of ongoing industrial espionage at Dow Chemical

also each involved significant amounts of time. Priority was

assigned to cases involving danger to human life, ongoing offenses,

and cases in which limitations were close to running. A fifth

agent was added in 1990, and a sixth and seventh and a financial

analyst were added in 1991.

In 1990, after Gerjes’ conviction and sentencing in the bonus

case, Kettler began focusing more on Delta, gathering and examining

documents. There were forty boxes of records. Kettler interviewed

employees at Delta (some before Delta closed), and he interviewed

Mims (with whom he had previously talked on the telephone) in 1991

and Frye some time in 1990 (after September of that year) or

possibly 1991. In January 1992, Ferguson pleaded guilty to charges

in connection with the instant transactions pursuant to a deal,

and, according to the government’s response to Crouch’s motion to

dismiss, Ferguson “gave information which focused the government’s

investigation squarely on defendants Crouch, Frye and Shawell.” In

March 1992 Gerjes pleaded guilty to charges in connection with the

instant transactions and likewise agreed to cooperate with the

government. Gerjes’ sentencing on this conviction has apparently

13
been postponed, as has Ferguson’s sentencing, pending their

testimony in Crouch and Frye’s anticipated trial.

Frye testified before the grand jury in November 1992. Crouch

never testified before the grand jury.

Crouch testified at the hearing before the magistrate judge on

the motion to dismiss. He related that in the spring of 1986, when

Mims examined Delta, Mims requested, and received from Crouch, the

Delta records concerning the transactions in question and said “no,

we do not” when Crouch asked “if he had any problems with me in

connection with those transactions.” Crouch also stated that he

and his father were visited in 1989 by an Assistant United States

Attorney in connection with the Gerjes bonus prosecution and was

told that he, Crouch, “was not the subject of an investigation.”

In September or October 1990, Kettler came to Crouch’s title

company to get documents consisting of or including those

concerning these loans, and was furnished copies. Kettler, in

response to Crouch’s inquiry, said Crouch was not a subject of the

investigation. Kettler returned in June or September 1991 with a

subpoena and procured the original records.5 Again on this

occasion, Kettler responded “no” to Crouch’s inquiry whether he was

a subject of the investigation. In March 1992, Crouch was told he

was a subject of the grand jury investigation and might be indicted

(Frye was also so notified at that time). Other aspects of

5
Other evidence presented by Crouch indicated the records
then procured may have consisted of or included documents related
to other loans, and did not include those relating to Mark
Connally.

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Crouch’s testimony and other evidence at the hearing before the

magistrate judge are related below in connection with our

consideration of the showing of prejudice. Frye did not testify

before the magistrate judge.

Rulings Below

The magistrate judge recommended granting the motion to

dismiss. He concluded that the delay in indictment was

presumptively prejudicial, relying on Doggett v. United States, 112

S.Ct. 2686 (1992), although recognizing Doggett was a Sixth

Amendment case. He further opined that “[w]hile the Court must

confess that Crouch and Frye cannot, for the most part, identify

with specificity the actual harm they have suffered as a result of

the eight year lapse of time,” nevertheless they had “with the

added assistance of the presumption attendant to the eight-year

delay, proven the existence of substantial prejudice.” Relying on

Townley, the magistrate judge ruled that no showing of bad faith

was required, stating “this Court will not, and need not, decide

the issue of bad faith.” Instead, the magistrate judge balanced

the prejudice against the reasons for the delay. It weighed the

balance in favor of the defense, noting that “low priority assigned

to an investigation, overload of other investigative or prosecutive

responsibilities, and insufficient personnel, similar to the

reasons offered in the case at bar, are entitled to only slight

weight in the balance.” However, the magistrate judge did commend

the current prosecutor’s handling of the case since its assignment

to him in May 1991.

15
 The district court adopted the magistrate judge’s report,

except as modified and supplemented in the district court’s

opinion. Crouch, 835 F.Supp. at 938. The district court found

that there was presumptive prejudice under Doggett and that the

defendants had also shown “some actual prejudice to supplement

their reliance on the presumption.” Id. at 943. Relying on

Townley, the court did not require a finding of bad faith, which it

correctly stated the record “will not justify.” However, because

of the discovery and evidentiary limitations imposed by the

magistrate judge, the court stated that it “cannot be ruled out”

and “may have to be addressed on another day.” Id. at 943 & n.6.

The court did state that the delay in indictment “certainly smacks

of negligence.” Id. at 943. The court concluded that Crouch was

a “target” prior to Ferguson’s guilty plea. Id. It did not find,

however, and nothing in the record tends to show, that the

government, whatever it might otherwise have believed or suspected,

could have presented a winnable case against Crouch without the

testimony of either Ferguson, Gerjes, Shawell, or Frye. The court

further held that the reason for the delay advanced by the

government, “insufficient personnel available to investigate or

properly prepare this case,” was “at best, entitled to only slight

weight in the balance,” and was outweighed by the “prejudice,

actual and presumptive,” to the defendants, thus requiring

dismissal of the indictment. Id. at 946.

DISCUSSION

16
Bad Faith Requirement

In United States v. Marion. 92 S.Ct. 455 (1971), the Supreme

Court first addressed pre-indictment delay where limitations had

not run. There, the district court had granted, prior to trial,

the defendants’ motion to dismiss, which asserted that, although

the statute of limitations had not expired, the 38-month pre-

indictment delay violated their rights to due process and to a

speedy trial under the Fifth and Sixth Amendments. Id. at 457.

The district court concluded that the government had been “aware of

the relevant facts” more than two years prior to the indictment.

Id. at 458. The government appealed directly to the Supreme Court

under former 18 U.S.C. § 3731. The Court held that the Sixth

Amendment speedy trial clock did not start running until the return

of an indictment or other formal charge “or else the actual

restraints imposed by arrest and holding to answer a criminal

charge.” Id. at 463. Though conceding that “[p]assage of time,

whether before or after arrest, may impair memories, cause evidence

to be lost, deprive the defendant of witnesses, and otherwise

interfere with his ability to defend himself,” the Court also

recognized that “[p]ossible prejudice is inherent in any delay,

however short; it may also weaken the Government’s case.” Id. at

464 (footnote omitted). See also id. at 465 (“Actual prejudice to

the defense may result from the shortest and most necessary

delay”). Two principal reasons were noted for declining to apply

the Sixth Amendment to pre-indictment delay. First, “[a]llowing

inquiry into when the police could have arrested or when the

17
prosecutor could have charged would raise difficult problems of

proof. As one court said, ‘the Court would be engaged in lengthy

hearings in every case to determine whether or not the prosecuting

authorities had proceeded diligently or otherwise.’” Id. at 464

n.13. Second, and more prominently: “‘the applicable statute of

limitations . . . is the primary guarantee against bringing overly

stale criminal charges’” (quoting United States v. Ewell, 86 S.Ct.

773, 776 (1966)), and “[s]uch statutes represent legislative

assessments of relative interests of the State and the defendant in

administering and receiving justice . . . .” Id. at 464.

However, Marion went on to hold that:

“the statute of limitations does not fully define the
appellees’ rights with respect to the events occurring
prior to indictment. Thus, the Government concedes that
the Due Process Clause of the Fifth Amendment would
require dismissal of the indictment if it were shown at
trial that the pre-indictment delay in this case caused
substantial prejudice to appellees’ rights to a fair
trial and that the delay was an intentional device to
gain tactical advantage over the accused.” Id. at 465
(emphasis added).

The Court also noted “we need not, and could not now, determine

when and in what circumstances actual prejudice resulting from pre-

accusation delays requires the dismissal of the prosecution” and

indicated such a determination “will necessarily involve a delicate

judgment based on the circumstances of each case.” Id. at 466.

The Court then proceeded to reverse the order of dismissal, holding

there was no Sixth Amendment violation and that, as to due process:

“[n]or have appellees adequately demonstrated that the
pre-indictment delay by the Government violated the Due
Process Clause. No actual prejudice to the conduct of
the defense is alleged or proved, and there is no showing
that the Government intentionally delayed to gain some

18
 tactical advantage over appellees or to harass them.”
Id. at 466.

The opinion’s final sentence noted that “[e]vents of the trial may

demonstrate actual prejudice, but at the present time appellees’

due process claims are speculative and premature.” Id.

The Supreme Court next addressed pre-indictment delay in

United States v. Lovasco, 97 S.Ct. 2044 (1977), which again

involved a dismissal prior to trial. There the district court,

following a hearing, dismissed the indictment because of a

seventeen-month delay, during the last some six months of which a

defense witness died, between the time the government had “all the

information relating to the defendant’s alleged commission of the

offenses” and its presentation to the grand jury. The “Government

made no systematic effort in the District Court to explain its long

delay” and a divided panel of the Eighth Circuit affirmed (as to

all but one count), sustaining “the District Court’s finding that

the Government’s actions were ‘unjustified, unnecessary, and

unreasonable’” and that the defense had been impaired by the

witness’s death. Id. at 2047. The Supreme Court reversed. It

initially reiterated that “statutes of limitations . . . provide ‘”

the primary guarantee, against bringing overly stale criminal

charges”’” (quoting Marion’s quoting of Ewell), and that “the Due

Process Clause has a limited role to play in protecting against

oppressive delay.” Id. at 2048. The Court next held that Marion’s

concluding sentence “establishes only that proof of actual

prejudice makes a due process claim concrete and ripe for

adjudication, not that it makes the claim automatically valid.”

19
Lovasco at 2048. “Marion makes clear that proof of prejudice is

generally 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.” Lovasco at

2048-49. The Court then observed that the due process clause

affords protection “only” for violations of “those ‘fundamental

conceptions of justice which lie at the base of our civil and

political institutions’” (quoting Mooney v. Holohan, 55 S.Ct. 340,

342 (1935)), and “does not permit courts to abort criminal

prosecutions simply because they disagree with a prosecutor’s

judgment as to when to seek an indictment.” Lovasco at 2049.

Further: “Judges are not free, in defining ‘due process,’ to

impose on law enforcement officials our ‘personal and private

notions’ of fairness and to ‘disregard the limits that bind judges

in their judicial function.’” Id. (quoting Rochin v. California,

72 S.Ct. 205, 209 (1952)).

Lovasco next rejects the contention that the Constitution

requires that charges be filed promptly “once the Government has

assembled sufficient evidence to prove guilt beyond a reasonable

doubt.” Id. at 2050. It notes that such a rule “would cause

numerous problems in those cases in which a criminal transaction

involves more than one person or more than one illegal act,” and

that “if courts were required to decide in every case when the

prosecution should have commenced, it would be necessary for them

to trace the day-by-day progress of each investigation,” thus

burdening both prosecutors and courts. Id. & n.14. It concludes

20
in this respect: “We can find no such command in the Due Process

Clause of the Fifth Amendment. In our view, investigative delay is

fundamentally unlike delay undertaken by the Government solely ‘to

gain tactical advantage over the accused’. . . .” Id. at 2051

(quoting Marion, 92 S.Ct. at 465).6 Lovasco goes on to “hold that

to prosecute a defendant following investigative delay does not

deprive him of due process, even if his defense might have been

prejudiced by the lapse of time.” Id. at 2051-52. Thus, the Court

holds that the Court of Appeals erred in affirming the dismissal of

the indictment. Id. at 2052. In what might be described as a

postscript, the Lovasco Court goes on to observe that “neither this

Court nor any lower court has had a sustained opportunity to

consider the constitutional significance of various reasons for

delay. We therefore leave to the lower courts, in the first

instance, the task of applying the settled principle of due process

that we have discussed to the particular circumstances of

6
The Lovasco Court appended a footnote to this sentence
stating:

“In Marion we noted with approval that the
Government conceded that a ‘tactical’ delay would violate
the Due Process Clause. The Government renews that
concession here, Brief for United States 32, and expands
it somewhat by stating: ‘A due process violation might
also be made out upon a showing of prosecutorial delay
incurred in reckless disregard of circumstances, known to
the prosecution, suggesting that there existed an
appreciable risk that delay would impair the ability to
mount an effective defense.’ id. at 32-33, n.25. As the
Government notes, however, there is no evidence of
recklessness here.” Lovasco at 2051 n.17 (emphasis
added).

21
individual cases.” Id.7

Our decisions following Marion and before Lovasco generally

construed Marion as stated in United States v. Butts, 524 F.2d 975,

977 (5th Cir. 1973), viz:

“In United States v. Marion, . . . the Supreme Court held
that the applicable statute of limitations being the
primary guarantee against bringing overly stale criminal
charges, one must show (1) that substantial prejudice
resulted from the delay in seeking an indictment and (2)
that the delay was an intentional measure to gain a
tactical advantage before the indictment can be
dismissed.” (Emphasis added).

Other decisions of ours to the same effect include United States v.

Beckham, 505 F.2d 1316, 1319 (5th Cir.), cert. denied, 95 S.Ct.

1683 (1975); United States v. Duke, 527 F.2d 386, 388, 390 (5th

Cir.), cert. denied, 96 S.Ct. 3177 (1976); United States v.

7
In a footnote appended to the first of these sentences, the
Court observes that a law review article “has catalogued some of
the noninvestigative reasons for delay” and proceeds to quote
several passages from the article, including its references to
maintenance of an informer’s cover, “‘other motives . . . including
some sinister ones,’” and its reference to the fact that “‘various
prosecutorial decisions——such as the assignment of manpower and
priorities among investigations of known offences——may also affect
the length of such delays.’” Id. fn.19 (quoting Amsterdam, Speedy
Criminal Trial: Rights and Remedies, 27 Stan. L.R. 525, 527-28
(1975)). The footnote then gives a “see also” citation to Justice
Brennan’s concurring opinion in Dickey v. Florida, 90 S.Ct. 1564,
1572-73 & n.9 (1970). We observe that the indicated pages of
Justice Brennan’s concurrence in Dickey (in which Justice Marshall,
author of Lovasco, joined) discuss considerations pertaining to
whether the Sixth Amendment’s speedy trial guarantee is applicable
“to delays occurring before arrest or indictment.” Id. at 1572.
Justice Brennan’s opinion remarks that “[d]eliberate governmental
delay designed to harm the accused, however, constitutes abuse of
the criminal process.” Id. at 1573. In a footnote, Justice
Brennan also states, inter alia, “Delay, of course, may also result
because the government lacks sufficient resources to move more
quickly or because it negligently fails to act. When delay is not
the result of an intentional attempt to strengthen the government’s
case, it will very likely make more difficult proof of the
accused’s guilt.” Id. n.9.

22
Scallion, 533 F.2d 903, 912 (5th Cir. 1976), reh’g on other grds

denied, 548 F.2d 1168 (5th Cir. 1977), cert. denied, 98 S.Ct. 2843

(1978); and United States v. Manetta, 551 F.2d 1352, 1354 (5th Cir.

1977). See also United States v. Croucher, 532 F.2d 1042, 1044

(5th Cir. 1976).8

Since Lovasco, the overwhelming majority of our decisions have

stated the rule essentially as we had stated it in Butts, supra.

Thus, in United States v. Willis, 583 F.2d 203, 207 (5th Cir.

1978), we wrote that to prevail on a claim of preindictment delay

“the accused must show that: (1) substantial prejudice resulted

from the delay and (2) the delay was an intentional measure in

order to gain a technical advantage.” In United States v. Durnin,

632 F.2d 1297 (5th Cir. 1980), we rejected a due process claim of

preindictment delay 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

8
One of our decisions in this time frame states in its text
the rule essentially as stated in Butts, Duke, and our other above-
cited cases, but in a footnote suggests that it could be an open
question whether the two requirements as stated in Butts might be
considered alternative, rather than cumulative, requirements.
United States v. Avalos, 541 F.2d 1100, 1107 & n.9 (5th Cir. 1976),
cert. denied, 97 S.Ct. 1656 (1977). However, it is certainly now
clear that delay caused prejudice alone does not suffice. Lovasco,
97 S.Ct. at 2048-49, 2051-52. Hence, the requirements cannot be
alternative.

23
 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. . .[citing
Lovasco, Marion, and Willis]. 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. Trial Transcript, vol. 3, at 78.
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).

More recently, we wrote in United States v. Byrd, 31 F.3d 1329,

1339 (5th Cir. 1994), that: “To 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.” (Emphasis in original). In

all, since Lovasco at least twenty-nine different judges of this

Court——including twenty-five of the thirty-three judges who have

served either as active or senior judge of this Court since it

split October 1, 1981——have authored, or joined without reservation,

unanimous published opinions in some eighteen different cases

holding or stating in substance just what we said in Byrd, Durnin,

and Willis.9

9
In addition to Byrd, Durnin, and Willis, the post-Lovasco
published opinions referred to include: United States v. Neal, 27
F.3d 1035, 1041 (5th Cir. 1994), cert. denied, 115 S.Ct. 1165
(1995); 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. 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. 1611 (1987); United States v.

24
 We recognize that language to the contrary may be found in a

scattered few of our opinions. For example, in United States v.

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

(1978), we rejected the defendant’s preindictment delay claim

because he had not demonstrated any prejudice. Id. at 1316-1317.

The Brand panel then appended a footnote expressing its

disagreement with the government’s contention that “both actual

prejudice and intentional tactical delay” had to be shown,

asserting that instead the validity of a preindictment delay claim

“depends on the due process balancing between the extent of the

actual prejudice and the governmental interests at stake.” Id. at

1317 n.7. We did not there engage in any such balancing, however,

for we had already found no actual prejudice (nor did we even

identify or assess the reasons for the delay or “the governmental

interests at stake”). The Brand footnote is pure dicta. The panel

and the district court placed primary reliance on Townley——a quorum

decision by two judges——where, in affirming Townley’s conviction,

we rejected his claim that the district court had erred in

overruling his motion to dismiss for preindictment delay. The

Townley panel concluded that “the lengthy pre-indictment delay

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. Wehling, 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);
and United States v. Ramos, 586 F.2d 1078, 1079 (5th Cir. 1978).
Of course, there are also the numerous post-Marion, pre-Lovasco
cases to the same effect, such as Butts; Beckham; Duke; Scallion;
and Manetta.

25
somewhat prejudiced Townley,” id. at 586, but was not due to “bad

faith motive to prejudice” him. Id. at 581. Relying on Brand’s

footnote 7, the opinion declined to affirm on that basis, but

rather asserted that resolution of the issue “turns upon whether

the degree of prejudice thereby sustained by the accused is

sufficiently balanced by the good faith reasons advanced by the

government.” Townley at 582. We ultimately concluded that the way

the trial had actually unfolded, and particularly the way the

government had 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.

Townley notwithstanding, it is plain that the vast majority of

this Court’s opinions have followed the contrary approach as

reflected in Butts, Durnin, Byrd, and the other opinions cited in

note 9, supra. Although as an en banc court we are not strictly

bound by prior panel decisions, we now choose to follow the vast

majority of our prior opinions in this respect and to reject the

Townley approach.

We recognize that neither Marion nor Lovasco is crystal clear

on this issue, and each opinion contains some language that can

give comfort to either view. However, we believe that the better

reading of these opinions is that the Supreme Court, in instances

where the statute of limitations has not run, has refused to

26
recognize a claim of preindictment delay absent some bad faith or

improper purpose on the part of the prosecution. Both Marion and

Lovasco emphasize that “the primary” protection against

preindictment delay is the statute of limitations, and that the due

process clause has but “a limited role to play.” Lovasco at 2048.

The only due process violation specifically recognized is where the

delay not only “caused substantial prejudice” but also “was an

intentional device to gain tactical advantage.” Marion at 465.

Marion reversed the dismissal for preindictment delay stating

“there is no showing that the Government intentionally delayed to

gain some tactical advantage over appellees or to harass them.”

Id. at 466. Lovasco rejects the notion that prejudice from

preindictment delay is a sufficient, rather than merely a

necessary, condition for relief, id. at 2048-49, 2051-52. It

likewise rejects the contention that the due process clause

proscribes delay beyond the time the prosecution has assembled

sufficient evidence to prove guilt beyond a reasonable doubt. Id.

at 2050-51. Lovasco refuses to proscribe investigative delay

because such “delay is fundamentally unlike delay undertaken by the

Government solely ‘to gain tactical advantage over the accused.’”

Lovasco at 2051 (quoting Marion at 465). Moreover, Lovasco, rather

than remanding for reconsideration in light of its principles,

flatly held that the dismissal of the indictment was error despite

the findings of both the district court and the Court of Appeals

that the delay not only caused actual prejudice to the accused but

was also “‘unjustified, unnecessary, and unreasonable,’” id. at

27
2047, findings the Supreme Court never expressly disagreed with or

determined to be clearly erroneous.10 Indeed, both Lovasco and

Marion indicate the undesirability of attempting to make such

determinations. See, e.g., Marion at 464 & n.13; Lovasco at 2050

& n.14. Finally, neither Marion nor Lovasco mentions any

“balancing” or “weighing” of the extent of the prejudice against

the relative merit of the reasons for the delay. Indeed, the

closest thing to a reference to balancing is Marion’s statement

that limitations statutes “represent legislative assessments of

relative interests of the State and the defendant.” Id. at 464

(emphasis added).

Crucially, the Supreme Court itself, albeit in dicta, appears

to have interpreted Marion and Lovasco in essentially the same

manner as we did in Byrd, Durnin, Butts, and our other cases cited

in note 9, supra. Thus, in United States v. Gouveia, 104 S.Ct.

2292, 2299 (1984), the Court stated:

“But applicable statutes of limitations protect against
the prosecution’s bringing stale criminal charges against
any defendant, United States v. Lovasco, supra, 431 U.S.,
at 788-789, 97 S.Ct., at 2047-2048; United States v.
Marion, supra, 404 U.S., at 322, 92 S.Ct., at 464, and,
beyond that protection, the Fifth Amendment requires the
dismissal of an indictment, even if it is brought within
the statute of limitations, if the defendant can prove
that the Government’s delay in bringing the indictment
was a deliberate device to gain an advantage over him and
that it caused him actual prejudice in presenting his
defense. United States v. Lovasco, supra, 431 U.S., at

10
Indeed, such disagreement would be most unusual, given the
Supreme Court’s well-established “two court” doctrine. See, e.g.,
Graver Tank & Mfg. Co. v. Linde Air Products Co., 69 S.Ct. 535, 538
(1949) (Supreme Court will not “undertake to review concurrent
findings of fact by two courts below in the absence of a very
obvious and exceptional showing of error”).

28
 789-790, 97 S.Ct. at 2048-2049; United States v. Marion,
supra, 404 U.S., at 324, 92 S.Ct. at 465.” (Emphasis
added).

More recently, in Arizona v. Youngblood, 109 S.Ct. 333 (1988), the

Court, in support of its holding that “unless a criminal defendant

can show bad faith on the part of the police, failure to preserve

potentially useful evidence does not constitute a denial of due

process of law,” stated that:

“Our decisions in related areas have stressed the
importance for constitutional purposes of good or bad
faith on the part of the Government when the claim is
based on loss of evidence attributable to the Government.
In United States v. Marion, 404 U.S. 307, 92 S.Ct. 455,
30 L.Ed.2d 468 (1971), we said that ‘[n]o actual
prejudice to the conduct of the defense is alleged or
proved, and there is no showing that the Government
intentionally delayed to gain some tactical advantage
over appellees or to harass them.’ Id. at 325, 92 S.Ct.,
at 466; see also United States v. Lovasco, 431 U.S. 783,
790, 97 S.Ct. 2044, 2048, 52 L.Ed.2d 752 (1977).” Id. at
337.

A significant majority of our sister circuits appear to now

follow the same rule, namely that where limitations has not run

dismissal for preindictment delay requires a showing not only of

substantial, actual prejudice, but also that the prosecutor

intentionally delayed to gain tactical advantage or to advance some

other improper purpose. See, e.g., United States v. Mills, 925

F.2d 455, 464 (D.C. Cir. 1991), cert. denied, 113 S.Ct. 471 (1992)

(“. . . pre-indictment delay . . . offends due process if the

defendant can carry the burden of showing (1) that the government

delayed bringing the indictment in order to gain a tactical

advantage; and (2) that the delay caused him actual and substantial

29
prejudice”);11 United States v. Crooks, 766 F.2d 7, 11 (1st Cir.),

cert. denied, 106 S.Ct. 421 (1985) (“An indictment brought within

an applicable statute of limitations period is, constitutionally

speaking, late only if the delay significantly prejudices the

defendant and the government ‘intentionally delayed’ the indictment

‘to gain an unfair tactical advantage or for other bad faith

motives’”; emphasis added);12 United States v. Hoo, 825 F.2d 667,

671 (2d Cir. 1987), cert. denied, 108 S.Ct. 742 (1988);13 United

11
In support of this statement, Mills cites, among other cases,
Gouveia and our opinion in United States v. Delario, 912 F.2d 766,
769 (5th Cir. 1990). Mills at 464.
12
Crooks was authored by then Circuit Judge, now Justice,
Breyer. Other First Circuit opinions to the same effect as the
above passage from Crooks and in which then Circuit Judge Breyer
concurred include United States v. Acevedo, 842 F.2d 502, 504 (1st
Cir. 1988); United States v. Ricciandra, 788 F.2d 39, 42 (1st Cir),
cert. denied, 107 S.Ct. 166 (1986); and United States v. Marler,
756 F.2d 206, 213 (1st Cir. 1985). These authorities have more
recently been reaffirmed in United States v. McCoy, 977 F.2d 706,
711 (1st Cir. 1992).
13
In Hoo, the Second Circuit affirmed the denial of defendant’s
motion to dismiss for preindictment delay, stating:

“Because appellant has made no showing of an improper
prosecutorial motive, however, we find no deprivation of
appellant’s constitutional rights.

In United States v. Marion, 404 U.S. 307, 92 S.Ct.
455, 30 L.Ed.2d 468 (1971), the Supreme Court held that
the due process clause requires the dismissal of an
indictment because of preindictment delay only when the
delay causes ‘substantial prejudice’ to the defense and
the delay is an ‘intentional device to gain tactical
advantage over the accused.’ Id. at 324, 92 S.Ct. at
465. . . . In any event, appellant has failed to show
that the government had improperly delayed his
prosecution in order to gain a tactical advantage.” Id.
at 671.

In his dissent from the denial of certiorari in Hoo, Justice White
noted that the First, Third, Tenth, and Eleventh Circuits, as well

30
States v. Ismaili, 828 F.2d 153, 167 (3d Cir. 1987) (“to sustain a

dismissal of charges on the grounds of pre-indictment delay

pursuant to the Due Process Clause, a defendant must bear the

burden of proving two essential facts: (1) that the government

intentionally delayed in order to gain some tactical advantage over

him, and that (2) this intentional delay caused the defendant

actual prejudice”; footnote omitted); United States v. Brown, 959

F.2d 63, 66 (6th Cir. 1992) (“This court has consistently read

Lovasco to hold that ‘dismissal for pre-indictment delay is

warranted only when the defendant shows [1] substantial prejudice

to his right to a fair trial and [2] that the delay was an

intentional device by the government to gain a tactical

advantage’”); United States v. Sowa, 34 F.3d 447, 450 (7th Cir.

1994);14 United States v. Engstrom, 965 F.2d 836, 839 (10th Cir.

as the Second, “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,” that the Fourth and Ninth Circuits applied
a balancing test, and that there were intra-circuit conflicts in
the Fifth and Seventh Circuits. Hoo v. United States, 108 S.Ct.
742 (1988).
14
In Sowa, the Seventh Circuit stated:

“To establish that a pre-indictment delay violated
due process, 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 delayed
indictment to gain a tactical advantage or some other
impermissible reason. United States v. Marion, 404 U.S.
307, 325, 92 S.Ct. 455, 465, 30 L.Ed.2d 468 (1971). . .
. The district court . . . found that Sowa had proved
actual and substantial prejudice resulting from the
delay. . . .

. . . .

31
1992) (“there must be both a showing of actual prejudice and

evidence that the delay was purposeful in order to gain a tactical

advantage . . . a defendant must meet this two-pronged test”);

United States v. Hayes, 40 F.3d 362, 365 (11th Cir. 1994) (“In this

circuit, the defendant must show that he suffered substantial

prejudice and that the delay was the product of deliberate action

by the Government to gain a tactical advantage”).15

We conclude that several other considerations also strongly

militate against utilizing a Townley-type balancing test to

determine whether prejudicial preindictment delay violates due

process and in favor of requiring that the delay have been

intentionally caused by the prosecution to gain a tactical

Sowa’s claim, however, fails to meet the requirements of
the second prong. With respect to the government’s
delay, due process is only implicated if the government
purposely delayed the indictment to take advantage,
tactically, of the prejudice or otherwise acted in bad
faith.” Id. at 450.
15
In United States v. Stierwalt, 16 F.3d 282, 285 (8th Cir.
1994), the Court rejected the defendant’s claim of preindictment
delay, stating “[u]nless there is a showing that the government
intentionally delayed indictment to harass or to gain a tactical
advantage, there can be no due process violation.” The court also
observed that “there is no intimation that the preindictment delay
was intentional and designed to gain a tactical advantage over or
to harass Stierwalt”. The rule is similarly stated in United
States v. Scoggins, 992 F.2d 164, 166-167 (8th Cir. 1993).
However, in United States v. Miller, 20 F.3d 926 (8th Cir.), cert.
denied, 115 S.Ct. 226 (1994), the Court, without citing Stierwalt
or Scoggins, stated that if actual prejudice is established “the
court will then inquire into the reasons for the delay and balance
those reasons against the demonstrated prejudice.” Id. at 931.
The Court ultimately affirmed the conviction, and stated in a
footnote concerning periods of delay not “due to legitimate
investigatory needs” that those “appear to be due to administrative
delays, inertia or at worst negligence. We agree with the
magistrate’s finding that ‘there was absolutely no evidence that
the delay was for strategic reasons.’” Id. & n.5.

32
advantage over the defendant or for some other bad faith purpose.

The Townley test purports to weigh or balance the extent or

degree of the actual prejudice against the extent to which the

government’s “good faith reasons” for the delay deviate from what

the court believes to be appropriate.16 However, what this test

seeks to do is to compare the incomparable. The items to be placed

on either side of the balance (imprecise in themselves) are wholly

different from each other and have no possible common denominator

that would allow determination of which “weighs” the most. Not

only is there no scale or conversion table to tell us whether

eighty percent of minimally adequate prosecutorial and

investigative staffing is outweighed by a low-medium amount of

actual prejudice, there are no recognized general standards or

principles to aid us in making that determination and virtually no

body of precedent or historic practice to look to for guidance.

Inevitably, then, a “length of the Chancellor’s foot” sort of

resolution will ensue and judges will necessarily define due

process in each such weighing by their own “‘personal and private

notions’ of fairness,” contrary to the admonition of Lovasco.

Apart from the above difficulty, grounding a due process

violation on the basis of good faith but inadequate, ineffective,

or insufficient governmental personnel or management leading to

preindictment delay runs counter to two basic constitutional

principles. In the first place, “[h]istorically, this guarantee of

16
Inferentially, Townley would also grant relief whenever any
actual prejudice resulted from delay intentionally caused to gain
tactical advantage.

33
due process has been applied to deliberate decisions of government

officials to deprive a person of life, liberty, or property,”

Daniels v. Williams, 106 S.Ct. 662, 665 (1986), and hence “the Due

Process Clause . . . is not implicated by the lack of due care of

an official causing unintended injury to life, liberty or

property.” Davidson v. Cannon, 106 S.Ct. 668, 670 (1986).17

Contrary to these principles, however, the Townley test would find

a due process violation where the government acted in good faith

and did not deliberately seek to prejudice the party ultimately

accused.

Finally, serious separation of powers concerns are implicated.

17
Crouch and Frye argue by analogy to the rule of Brady v.
Maryland, 83 S.Ct. 1194 (1963), that a prosecutor’s suppression of
exculpatory evidence violates due process “irrespective of the good
faith or bad faith of the prosecution.” Id. at 1196. Brady——which
relates to post-indictment conduct by the prosecution——might be a
more cogent analogy if urged to support a contention that Sixth
Amendment speedy trial rights are violated by prosecutorial post-
indictment delay irrespective of the good faith or bad faith of the
prosecution. With arrest or indictment, a variety of
constitutional rights arise, as do more at trial itself. But, as
Marion and Lovasco make clear, the primary protection against undue
prearrest and preindictment delay is the statute of limitations,
and the Due Process Clause has but a limited role to play in that
respect. There is no general common law or constitutional duty to
bring charges as soon as reasonably practicable, and it has long
been recognized that preindictment delay generally favors the
defense. See, e.g., United States v. Davis, 487 F.2d 112, 119 (5th
Cir. 1973), cert. denied, 94 S.Ct. 1573 (1974) (“‘all practiced
trial lawyers are well aware that the attrition from such delay is
more damaging to the prosecution’s case than to that of the
defense. This will be so as long as the prosecution has the burden
of proof.’”). Hence, the rule of Arizona v. Youngblood, 109 S.Ct.
333, 337 (1988), that “unless a criminal defendant can show bad
faith on the part of the police, failure to preserve potentially
useful evidence does not constitute a denial of due process,”
provides a more apt analogy than that of Brady, as the Supreme
Court itself recognized in Youngblood by citing Marion and Lovasco
in support of its said holding.

34
Here, for example, the panel concluded that the reasons for the

delay——”lack of manpower and the low priority which this

investigation was assigned”——were “insufficient to outweigh the

actual prejudice to Crouch and Frye.” Crouch at 483.18 Finding

these reasons “insufficient” is in substance determining that

greater manpower should generally have been allocated to

investigation and prosecution in that jurisdiction, and that a

higher priority should have been assigned to this particular

investigation.19 Yet those decisions are ones essentially committed

to the legislative and executive branches, and the case for

judicial second guessing is particularly weak where it is directed

at preindictment conduct and is supported not by any specific

constitutional guaranty or by any long-established tradition of

judicial oversight, but only by the general contours of the due

process clause.

For example, the government has cited to us the following

observations in a report of the House Committee on Government

18
Similarly, the Townley panel accepted that much of the delay
“was occasioned by the low priority assigned to this investigation
and to the overload of other investigative and prosecutive
responsibilities allocated to the available personnel,” Townley at
582, and also “because of changes of government prosecuting
personnel.” Id. at 581. The panel indicated that had the accused
not been only “somewhat” actually prejudiced——as it developed after
trial——these reasons would have been insufficient and a due process
violation would have occurred.
19
If all the manpower that could reasonably be expected has
been furnished and the highest reasonably appropriate priority has
been assigned to the matter in question, but a due process
violation has nevertheless been found despite the delay’s being
caused only by the insufficient manpower and the relative priority
assigned to the matter, then the due process violation must
necessarily rest on prejudice alone, contrary to Lovasco.

35
Operations issued some ten months before FIRREA extended the

presently relevant limitations period to ten years,20 viz:

“19. a. Pending bank fraud investigations are
overwhelming the Federal criminal justice system. There
are acute shortages of sufficiently compensated and
experienced prosecutors and investigators in most areas
of the nation to handle these more complex cases.

b. Timely investigations and/or prosecutions of many of
the 3,340 pending FBI investigations involving losses of
$100,000 or more is highly improbable, if not impossible,
without a substantial increase in the Justice
Department’s static budget.”21

In response, Crouch’s brief cites, inter alia, a 1990 report of the

same House Committee,22 which he characterizes as having “found that

shortages of personnel for the investigation and prosecution of

such fraud and embezzlement (F&E) cases were the result of the

failure of the Executive Branch and the Department of Justice to

request sufficient finding and to assign appropriate priorities.”

What are we to make of all this? Are we to say that there

would be no due process violation if the President had vigorously

and timely requested additional funds to investigate and prosecute

these cases, but Congress had refused? Or, that even so we will

find a due process violation because Congress shouldn’t have

refused? Of course, funds must come from somewhere. Are we to say

that such additional funding is better than increasing taxes or the

20
See Pub. L. 101-73, Title IX, § 961(l)(1), Aug. 9, 1989, 103
Stat. 501; 18 U.S.C. § 3293.
21
2 Pulles, Whitlock, and Hogg FIRREA: A Legislative History
and Section-by-Section Analysis Title IX (McGraw-Hill 1993)
(quoting House Report 100-1088, October 18, 1988).
22
H.R. Rep. No. 101-982, 101st Cong., 2nd Sess. (1990).

36
deficit or decreasing funding for some other programs? Are we to

judge whether financial institution fraud should be assigned a

higher priority than drug or other offenses? It seems to us that

all those decisions are quintessentially the business of either the

legislative or the executive branch, or both, rather than the

judiciary. Yet, a Townley approach——so long as it actually tries

to “balance” or “weigh” instead of merely find a due process

violation on the basis of the extent of the prejudice

alone——inevitably involves us in grading or evaluating the merit of

resource allocation and management decisions that are properly the

province of the executive and/or legislative branches. Delay due

to such causes is fundamentally unlike intentional delay to gain

tactical advantage or for other improper purpose.

Accordingly, we reject the Townley balancing test and hold

that for preindictment delay to violate the due process clause it

must not only cause the accused substantial, actual prejudice, but

the delay must also have been intentionally undertaken by the

government for the purpose of gaining some tactical advantage over

the accused in the contemplated prosecution or for some other

impermissible, bad faith purpose.23 We need not now attempt to

23
Intentional delay for the purpose of gaining tactical
advantage would include delay for the purpose of rendering
unavailable evidence favorable to the defense or which would tend
to undercut the government’s case. But, it would not include delay
to affirmatively strengthen the government’s case——such as delay
until a potential witness for the government becomes available by
reason of a plea bargain or the like——even to a level well beyond
that reasonably thought necessary to preclude the granting of a
post-verdict motion for judgment of acquittal under Fed. R. Crim.
P. 29(c) (and such a purpose would not be impermissible).

37
catalogue all possible “other” impermissible, bad faith purposes of

intentional delay, although Marion indicates that a purpose “to

harass” the defendant would be included. Id. at 466.24 As

suggested by Marion and Lovasco, we leave that to further case-by-

case development.

We turn now to the prejudice component of the due process

claim.

Prejudice Requirement

General Principles

As noted, we agree with the panel’s holding, 51 F.2d at 483-

84, that the district court erred in concluding that the length of

preindictment delay established substantial presumptive prejudice.25

All our precedents, as well as a fair reading of Marion and

Lovasco, plainly indicate that actual, not presumptive, prejudice

must be shown where complaint is made of preindictment delay. See,

e.g., United States v. Wehling, 676 F.2d 1053, 1059 (5th Cir.

1982); United States v. McGough, 510 F.2d 598, 604 (5th Cir. 1975)

(“when preindictment 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”); Butts at 977

(“[t]he mere passage of time [does] not constitut[e] the type of

24
Neither Crouch nor Frye has alleged any specific such “other”
impermissible, bad faith purpose.
25
The magistrate judge, whose report the district court
approved and adopted as modified and supplemented by its opinion,
likewise found such presumptive prejudice. And the magistrate
judge and the district judge each also appears to have combined the
presumed prejudice with the actual prejudice found and then weighed
the total against the government’s reasons for the delay.

38
actual prejudice necessary to set aside an indictment returned

within the appropriate statute of limitations”). The district

court’s reliance on the Supreme Court’s Doggett decision was

misplaced because Doggett was a Sixth Amendment post-indictment

delay case. See United States v. Beszborn, 21 F.3d 62 at 66 (5th

Cir.), cert. denied, 115 S.Ct. 330 (1994).26 See also, e.g., Byrd

at 1339; United States v. Bischel, 61 F.3d 1429, 1436 (9th Cir.

1995).

26
We explained in Beszborn:

“The law is well settled that it is actual
prejudice, not possible or presumed prejudice, which is
required to support a due process claim. The applicable
statute of limitations is the mechanism established by
law to guard against possible, as distinguished from
actual, prejudice resulting from the passage of time
between crime and the charge, protecting a defendant from
overly stale criminal charges. United States v. Ewell,
383 U.S. 116, 86 S.Ct. 773, 15 L.Ed.2d 627 (1966); United
States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d
468 (1971).

The concept of presumed prejudice has no place in a
due process analysis, and the district court’s reliance
on Doggett is misplaced. Doggett was a case involving a
Sixth Amendment speedy trial violation claim, due to
post-indictment delay, rather than pre-indictment delay.
The proper measure of a claim of prejudice due to pre-
indictment delay is the due process standard of the Fifth
Amendment, which requires a showing of actual prejudice.
. . .

The Supreme Court was clear in its directive that,
“There is no need to . . . guard against mere possibility
that . . . delays will prejudice the defense . . . since
statutes of limitation already perform that function.”
United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30
L.Ed.2d 468 (1971).” Id. at 66.

Moreover, preindictment delay generally tends to favor the defense,
not the prosecution. See, e.g., United States v. Davis, 487 F.2d
112, 119 (5th Cir. 1973), cert. denied, 94 S.Ct. 1573 (1974).

39
 The prejudice to be shown not only must be actual, rather than

presumed or potential, but must also be “substantial.” See, e.g.,

Marion at 465 (“substantial prejudice”); United States v. West, 58

F.3d 133, 136 (5th Cir. 1995) (“actual and substantial prejudice”);

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

(“actual and substantial prejudice”); Wehling at 1059 (5th Cir.

1982) (“‘substantial prejudice,’” quoting Marion); United States v.

Willis, 583 F.2d 203, 207 (5th Cir. 1978) (“substantial

prejudice”); Butts at 977 (“substantial prejudice”); Beckham at

1319 (“substantial actual prejudice”). Speculative prejudice does

not suffice, United States v. Parks, 68 F.3d 860, 868 (5th Cir.

1995), and “[v]ague assertions of lost witnesses, faded memories,

or misplaced documents are insufficient.” Beszborn at 67. See

also West at 136; Royals at 1090; Wehling at 1059. A mere loss of

potential witnesses is insufficient absent a showing that their

testimony “would have actually aided the defense.” Beszborn at 66.

See also West at 136; Royals at 1090; Wehling at 1059; United

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

some six potential defense witnesses,” some of whom the defendant

claimed “would have testified as to firsthand knowledge of several

of the transactions” involved).27 Moreover, to establish prejudice

based on lost witnesses or documents, the defendant must also show

that “the information . . . could not otherwise be obtained from

other sources.” Beszborn at 67. See also Royals at 1090

27
And, of course, loss of witnesses or documents occurring
before delay becomes improper are not considered. See, e.g., Parks
at 868. Cf. Walters v. Scott, 21 F.3d 683, 688-89 (5th Cir. 1994).

40
(“[D]efendant has failed to show that such evidence could not have

otherwise been obtained”).

That actual, substantial prejudice——not merely possible or

potential prejudice——must be shown is also consistent with the

nature of the due process right in question. That right is one not

to be “deprived of life, liberty, or property, without due process

of law.” U.S. Const., Amend. 5. In the present context,

deprivation will normally occur only by conviction, and not simply

by trial itself. Cf. Olim v. Wakinekona, 103 S.Ct. 1741, 1748

(1983) (“Process is not an end in itself. Its constitutional

purpose is to protect a substantive interest to which the

individual has a legitimate claim of entitlement”). 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 preindictment delay. We are aware of no

authority to the contrary. 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).

This, too, fully applies to claims of preindictment delay. The

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

41
convicted, from successfully demonstrating that the undue and

improper preindictment delay substantially and unfairly prejudiced

his ability to avoid that result. Thus in Marion, the Court

reversed the pretrial dismissal for preindictment 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.” Id. at 466.28 See also MacDonald

at 1552 (“The denial of a pretrial motion to dismiss an indictment

on speedy trial grounds does not indicate that a like motion made

after trial——when prejudice can better be gauged——would also be

denied”; emphasis added).

Necessarily, then, a far stronger showing is required to

establish the requisite actual, substantial prejudice pretrial than

would be required after trial and conviction. Indeed, it is

difficult to imagine how a pretrial showing of prejudice would not

in almost all cases be to some significant extent speculative and

potential rather than actual and substantial. We are aware of no

reported federal appellate decision since Lovasco that has

sustained a pretrial dismissal for preindictment delay where the

28
We observe that the Lovasco Court, while reversing the
dismissal prior to trial for preindictment delay, commented in a
footnote that the government contended “that the District Court
should have deferred action on the [defendant’s] motion to dismiss
[for preindictment delay] until after trial, at which time it could
have assessed any prejudice to the respondent [defendant] in light
of the events at trial.” Id. at 2048 n.7. The Court declined to
address the merits of this contention because it “was not raised in
the District Court or in the Court of Appeals.” Id.

42
statute of limitations had not run.29 This is not to say that a

motion to dismiss on such a basis should not be filed and initially

considered prior to trial. Cf. Fed. R. Crim. P. 12(b)(1) & (2).

However, at least in all but the very clearest and most compelling

cases, the district court, rather than grant such a motion prior to

trial, should carry it with the case, and make the determination of

whether actual, substantial prejudice resulted from the improper

delay in light of what actually transpired at trial.30 A number of

reported decisions in this and other circuits reflect such a method

of proceeding. See, e.g., Townley at 581 (motion to dismiss

considered at pretrial hearing, district court reserved ruling and

subsequently denied motion after conclusion of the evidence; we

affirmed); United States v. Scott, 579 F.2d 1013 (6th Cir. 1978)

(motion to dismiss two counts of three-count indictment denied

without prejudice prior to trial, granted after close of all the

evidence, jury acquittal on remaining count; affirmed). Cf. United

States v. Glist, 594 F.2d 1374 (10th Cir. 1979) (motions to dismiss

29
And, we are aware of only one such case prior to Lovasco, a
1976 decision by a divided panel of the Eighth Circuit in United
States v. Barket, 530 F.2d 189 (8th Cir. 1976). Shortly after
Barket, another divided panel of the Eighth Circuit sustained the
pretrial dismissal of three counts of a four-count indictment on a
due process, preindictment delay basis, but was reversed by the
Supreme Court in Lovasco.
30
Moreover, where the claim of preindictment delay is ruled on
prior to trial, the defense, which will frequently be in the best
position to find or unearth exculpatory evidence allegedly lost due
to delay or evidence that may adequately replace or substitute for
it, has every incentive not to diligently search for or produce
such evidence. At trial, however, the incentive is just the
opposite. Then, if the evidence or some adequate substitute is not
produced, we can have far more confidence that it really could not
have been.

43
for preindictment delay taken under advisement prior to trial and

granted as to one of four counts after five days of trial;

affirmed).31

Townley presents an instructive example of how a strong

pretrial showing of substantial prejudice may ultimately dissolve

in the unfolding of the actual trial itself. Townley and his

partner Owens were charged with mail fraud in connection with

inducing persons to purchase and invest in nonexistent vending

machines. Townley at 582. Townley claimed that due to

preindictment delay he was unable to show that he had really

believed the machines would be produced and 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.”

Id. Townley also claimed prejudice from being unable to adequately

31
Although it appears that in at least some of these cases the
motion was ruled on prior to verdict, normally the much better
practice will be to await the verdict rather than to
dismiss——particularly where dismissal would be of an entire count
forming a substantial part of the indictment——preverdict. This will
allow the government to appeal the dismissal in the event of a
guilty verdict (if the verdict is not guilty, the issue is moot)
and, should the dismissal be set aside on appeal, will obviate the
necessity of a new trial (which in any event might raise double
jeopardy concerns).

44
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).

And, we 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. We accordingly affirmed the

district court’s decision, after the close of all the evidence, to

deny Townley’s pretrial motion to dismiss for preindictment delay.

Similarly instructive is our opinion in McGough, reversing the

district court’s pretrial dismissal on account of preindictment

delay. We described the defendant’s 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 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

45
further findings in that respect, 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. See also,

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

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

1364, 1369 (5th Cir.), cert. denied, 98 S.Ct. 478, 479 (1994).32

Prejudice in this case

At this stage of the proceedings, any claim that Crouch and

Frye will suffer actual and substantial trial prejudice from the

preindictment delay——let alone be convicted——is purely speculative

and unsupported by the record. So far as actual prejudice is

concerned, there is simply no basis on which to conclude that this

case will not be another Townley.

Crouch’s main claim is that the delay caused him to lose the

testimony of six witnesses who had died prior to the July 1993

hearing before the magistrate judge, namely: his father, who died

in June 1992; Gubert, who died at some unspecified time in 1988;

32
In Robinson, the habeas petitioner claimed that the post-
indictment delay caused him to lose 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. In Rice, in rejecting a preindictment 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.

46
Tschearner, an employee of Bankers, who died at a wholly

unspecified time before return of the indictment; Levy, a Bankers

outside director and chairman of its loan and executive committees

who also died at a wholly unspecified time before the indictment;

Carson, chairman of Vision Bank, who died in October 1992; and John

Connally, who died June 15, 1993.

As to Levy and Tschearner, so far as this record discloses,

they may well have died in 1987 or 1988, prior to any delay having

become even arguably undue, and hence their “loss” could not be

attributable to any improper delay. The same is true of Gubert,

who for all this record shows may have died in January 1988.

Moreover, there was no adequate showing that these three

individuals could have contributed any testimony that was material

or related to matters that could not otherwise be established.

Levy was not claimed to have any knowledge at all of——much less any

participation in——any of the transactions at issue. He would simply

have testified how an outside director of a savings and loan

association typically functioned and relied on management. There

is no suggestion that similar testimony was not otherwise readily

available. Tschearner, as a Bankers’ employee, negotiated with

Ferguson concerning his purchase from Bankers of its REO tracts,

and, according to Crouch, would have testified that the only people

Ferguson mentioned to Tschearner as individuals at Delta with whom

Ferguson dealt were Gerjes and Erskine, and that Crouch was not

mentioned. But this is not necessarily contrary to the

government’s theory of the case, and there is nothing to suggest

47
that Ferguson will give contrary testimony or will not, indeed,

confirm Tschearner’s putative testimony that Ferguson did not

mention Crouch to Tschearner. Further, Tschearner is not shown to

have had any other knowledge of or connection with the transactions

at issue, and Fieselman, Bankers’ then president who signed on

behalf of Bankers all the papers for its signature in the

transactions in question, was alive and available to testify.33 As

to Gubert, there was absolutely no showing or claim that he had any

knowledge of or participation in any of the transactions in

question. His putative testimony is essentially the same as that

of Crouch’s father, discussed below, and is insufficient to show

prejudice for the same reasons.

Crouch’s father died in June 1992, and accordingly the loss of

his testimony——unlike that of Levy, Tschearner, and Gubert——is

doubtless fairly attributed to any delay here that may be found

undue and improper. However, Crouch does not claim that his

father——who was not shown to have been a Delta officer, employee,

or director at any of the times referenced in the indictment——ever

had any knowledge whatever of, or in any way participated in, any

of the charged transactions. Many of the matters Crouch says his

father could have testified to——such as that Crouch, though a Delta

director and chairman of its board, was not a Delta officer or

employee and did not have an office on Delta premises, and that his

33
It was also asserted that Tschearner could testify as to the
then value of the Bankers REO tracts. However, there is no claim
that this information was not reasonably available from other
sources; nor can the actual significance of such testimony be
assessed on the basis of this record.

48
father had testified against Gerjes in the bonus case——appear to be

essentially undisputed as well as easily established by other

evidence. While Crouch states his father would testify that

“Gerjes misled my father, myself, other directors and shareholders

of Delta,” this is only of attenuated relevance at best, as it does

not concern any of the transactions at issue. Moreover, there is

no claim that similar testimony is not available from others of the

several Delta directors.34 For example, this is what the FHLB

report of examination relates that Cholakian (who succeeded Gerjes

as president and had been a director since 1982) told the examiner,

and there is nothing to indicate Cholakian is not available to so

testify. Moreover, as noted, Gerjes, already convicted of taking

illegal “bonuses” on Delta loans, may well admit to some misleading

of Delta board members. We further observe that ample impeachment

of Gerjes is available, wholly apart from any testimony of Crouch’s

father, by showing Gerjes’ two prior convictions, his plea bargain,

his involuntary termination from Delta, and the fact that Crouch’s

father testified against him, and Crouch was prepared to, in his

1989 bonus case conviction.

Crouch’s fifth missing witness, Corson, had been chairman of

Vision Bank, an institution not claimed by anyone to have any

involvement whatever in the instant transactions. Nor does Crouch

claim that Corson had any knowledge whatever of, or any

participation in, any of the instant transactions. Crouch

34
These same observations apply equally to Crouch’s assertion
that his father would testify “I had to rely on what the officers
of the association told me.”

49
apparently thought Corson could have testified to wholly unrelated

and unexplained Florida real estate transactions——occurring both

before and after the transactions here at issue——involving Ferguson

and Delta officer Erskine, to show “the type of person” each of

them “is.” Such unrelated transactions are at best of the most

attenuated relevance. Moreover, Ferguson has already pled guilty

to offenses involving the instant transactions, so his willingness

to do that sort of thing is hardly inconsistent with the

government’s likely proof at trial. Nor is there any indication

that Ferguson would deny his involvement in the Florida

transactions, the nature of which is in any event wholly

unexplained. This is likewise the case as to Erskine; indeed,

there is no indication Erskine will likely testify.

Finally, Crouch claims John Connally, who died June 15, 1993,

after a brief illness, would have been a favorable witness. It is

unclear, however, that the loss of this witness is attributable to

preindictment delay. Crouch was aware he might well be indicted

about fifteen months before John Connally died, but apparently took

no steps to interview him or the like. Moreover, the original

trial setting in this case was for a time several months before

June 15, 1993, and there is nothing to suggest John Connally would

have been unavailable at the earlier trial setting. Nor is there

any showing that his testimony would have been favorable. Crouch

said “I feel like” Connally would have testified he did not

consider himself or the Barnes-Connally partnership liable for the

Delta loans to Mark Connally because John Connally’s financial

50
statement of some six months after the loans closed did not list

them as liabilities. However, there is no showing that this

financial statement is unavailable. Nor is there any suggestion

that either Mark Connally or Ben Barnes or the government will

dispute that John Connally did not ever consider himself or his

partnership with Ben Barnes liable on the Delta loans to Mark

Connally. Indeed, the government represented at the hearing before

the magistrate judge that “the people from Austin who were involved

in this case were Ben Barnes and Mark Connally, not John Connally.”

There is no basis to assume, prior to trial, that the trial

evidence will show otherwise. At this stage it is simply

impossible to tell whether John Connally’s absence would

substantially prejudice the defense.

To the extent that Crouch may have lost any witnesses due to

improper delay, he has not shown any resulting actual, substantial

prejudice, and his claims of prejudice are essentially speculative

and premature. As to lost documentation, Crouch’s motion to

dismiss admits that “the Defendant cannot point to the loss of any

significant documents at this time.” And, there is no showing that

any of the loan documents or closing papers are missing.35

Frye did not testify at the evidentiary hearing. Frye’s

35
While Crouch’s briefs and argument suggest that minutes of
loan committee meetings are missing, such is not established by the
record. At the hearing, a documents custodian testified it would
probably take a search of about two weeks duration to determine if
those minutes could be located. Just what Crouch hoped to show by
those minutes is unclear, and there is certainly nothing to suggest
that Crouch will not be able to show that the minutes did not
reflect nominee loans.

51
former secretary, who came to work for him in March 1987, testified

that in September 1990, when he moved to a smaller office, she

threw away all his office files (except accounting files). Frye

had customarily made notes of telephone conversations and put them

in these files. She had never heard of Delta before Frye testified

at the grand jury on November 1992.36 She did not know whether or

not the Frye office files thrown away in 1990 included any related

to the transactions involved in the indictment. When asked if she

knew whether Frye had any files at his house, she replied, “I don’t

think so, but I can’t say yes or no.” It appears that all the loan

documents, including closing statements and records showing

disbursements, are available, and Frye does not contend otherwise,

except in two particulars.37

First, the loan documents include a Memorandum of Profit

Participation Agreement, executed by Ferguson C&D, Inc. and Frye’s

J.M.G. Corporation in recordable form, reflecting that Ferguson

C&D, Inc. had a profit participation in one of the Delta REO tracts

Frye purchased, but not specifying the parties’ respective

36
On cross examination she said she was unaware that after
March 1987 Frye was involved “in a countersuit” respecting a four
million dollar loan at Delta. The record indicates that that
matter was settled by the property Frye purchased (as alleged
nominee for Ferguson) being conveyed back to Delta.
37
Frye’s motion to dismiss for preindictment delay also
mentions five witnesses whom it asserts Frye is unable to locate,
but does not allege what they could have testified to; the motion
likewise alleges that Frye’s attorney at the time of the
transactions (one Higgs) is now unable to recall them. The motion
is not verified and no evidence supporting any of those allegations
was offered at the hearing before the magistrate judge.

52
percentages of profits.38 Attorney Johnson testified that this

document, and certain other of the loan documents pertaining to

transactions between Frye and Ferguson (including a note and deed

of trust, in which Johnson was named trustee, and a letter from

Delta to Ferguson C&D, Inc.), appeared to have been prepared by

him, as they bore his typed initials and their format and style

were consistent with his usual drafting of such documents. Johnson

at the time the loans closed was with the Phillips, King, Smith &

Wright law firm, which he subsequently left in March 1989, and one

of the closing statements shows that firm’s fees were paid at

closing by Frye. Johnson testified he had no recollection of any

of the transactions or of being at the closing, had never met or

known either Ferguson or Frye or Crouch, and did not know whom he

was representing in preparing the documents.39 He stated that he

does not now have any file on any of these transactions, and does

not now recall whether he ever had such file. He never threw away

any files pertaining to Frye, Ferguson, or Delta. He had “no idea”

whether the firm he was with at the time has any files on the

transactions in question. Attorney King——who had represented Frye

in the early stages of this prosecution and sat with him at the

hearing before the magistrate judge——was a partner in the same law

firm with Johnson at the time of the transactions in question, but

38
There is no evidence as to whether or not this Memorandum (or
a duplicate of it) was actually recorded.
39
That Frye apparently paid his fee did not necessarily mean
he was representing Frye. Johnson did not know whether his then
firm had ever represented Frye.

53
left the firm sometime before Johnson did. Johnson testified that

“ordinarily” a Profit Participation Agreement, specifying the

profit percentages of the parties, would accompany a Memorandum of

Profit Participation Agreement, but he had no independent

recollection of ever having prepared or seen a Profit Participation

Agreement as referred to in the Memorandum.

Frye argues that he has been prejudiced because the Profit

Participation Agreement itself has been lost, and it would indicate

that he was not a mere nominee for Ferguson. There are several

answers to this. In the first place, there is no direct evidence

that such an agreement ever existed; certainly there is no

testimony that it did. Conversely, there is nothing to indicate

that the government will take the position that there was no such

agreement, or that Ferguson will not admit that such an agreement

existed (or that Ferguson or Frye himself cannot testify to the

essential terms of the agreement). Indeed, there is no evidence

that such an agreement, if it ever existed, cannot be produced at

trial. There is no evidence that Ferguson does not have the

agreement——or, indeed, that Frye does not——or that any effort had

been made to search the files of the law firm Johnson was with at

the time of the transactions.40 Finally, there is nothing to

suggest that the agreement itself would be substantially more

helpful to Frye than the Memorandum. The crux of the point Frye

seeks to make——that he retained a continuing interest in the

40
While Johnson’s testimony suggests that the firm had
dissolved not long after he left in March 1989, he also stated that
he knew “they stored some files off campus.”

54
property with Ferguson——is made by the Memorandum itself. At this

stage, Frye’s claim of prejudice respecting the alleged Profit

Participation Agreement is essentially speculative.

Frye’s second claim of prejudice relates to the original of “a

waiver of notice of special meeting of directors” of Frye’s J.M.G.

Financial Corporation that was submitted in connection with the

application to Delta for the $3,950,000 loan to Frye and J.M.G. to

purchase Delta REO. The government had apparently been unable to

locate the original of the waiver of notice, but had a Xerox copy

of it as purportedly signed by attorney Dunn. It also appears that

Dunn had informed the authorities that he had not signed the

document and that his purported signature on it was not in fact

his. Frye asserts that the loss of the original is prejudicial

because handwriting analysis cannot be performed on a copy to show

that Frye did not forge Dunn’s signature.41 This is assertedly

41
This contention is entirely based on FBI Agent Kettler’s
testimony as follows:

“Q. [Frye’s counsel] All right. Tell me whether or not
you have ever presented this document to the FBI for a
handwriting analysis to determine whether Mike Frye was
or was not the author of this thing that purports to say
Abe Dunn.

A. No, we haven’t

Q. And tell the Court why you haven’t.

A. It’s a copy.

Q. And you can’t do a handwriting analysis not from a
copy?

A. Not very well.”

In response to Frye’s counsel’s further suggestion that “we

55
relevant to count 18, which charges Crouch and Frye with false

statements to Delta in connection with its $3,950,000 loan to Frye,

contrary to section 1014, because

“[t]he [loan] application and corporate minutes were
materially false in that they purport to represent the
intent of the defendant Michael J. Frye that he and his
corporation be held liable for repayment of the debt,
when the defendants [Crouch and Frye] 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 director’s
meeting was actually held.”42

Again, Frye’s claims of prejudice in this connection are at this

stage speculative at best. To begin with, there is simply no

sufficient showing that a handwriting analysis could not be

performed, and indeed none had even been attempted (see note 41,

supra). Moreover, there is absolutely nothing to indicate that the

government will make any attempt to prove that Frye forged Dunn’s

signature, or even that Dunn’s purported signature was not his.

can’t even submit it for a handwriting analysis,” Kettler
responded:

“A. I’m not saying that. There may be some handwriting
analyses people that will work with copies, but our
people in our laboratory prefer originals.

Q. And in fact, they won’t work with copies; right?

A. I don’t know. I doubt it, but I don’t know for
sure. I don’t think they would.”

There was no evidence that any handwriting expert had ever
examined the copy or opined that no handwriting analysis could be
based on it.
42
Count 18 also alleged that the purpose of this “nominee loan”
was “to avoid loans to one borrower limitations.” As previously
indicated, the government’s theory of the case was that the real
borrower, for whom Frye was nominee, was Ferguson.

56
Indeed, evidence that Dunn’s signature on the notice was false is

neither necessary nor sufficient to prove that “no such directors’

meeting actually was held” as alleged in count 18. Finally, proof

that no director’s meeting was held is wholly unnecessary to

conviction on count 18, which in substance rests on the completely

unrelated “nominee” allegation, as does the government’s entire

theory of the case. We note in this connection that the government

has never taken the position that the loan papers were not

adequately worded and signed so as to bind Frye personally, or that

they were not adequate to bind his corporation, whether or not the

directors’ meeting in question actually occurred. And, Frye has

pending in the district court a motion to strike the count 18

directors’ meeting allegation on the grounds that it is immaterial,

and ruling thereon has been postponed until trial.43 Even if there

were potential prejudice to Frye in this connection, it could be

entirely obviated by striking from count 18 the allegation as to

the directors’ meeting——which would leave the plainly main thrust

of that count wholly intact——and/or by excluding proof as to the

verity of Dunn’s signature on the notice. Dismissing the entire

indictment prior to trial is plainly uncalled for.

Frye’s other assertions of prejudice are equally unavailing.44

43
Frye’s motion points out that the failure of the board to
approve “could not, as a matter of law, have been raised as a
defense by the borrower corporation,” citing Texas Business
Corporation Act Art. 2.04(B). The government has never disputed
this, and has only argued that ruling should be deferred to trial.
44
With respect to Frye’s possible loss of notes of telephone
conversations, Frye has referred to a memorandum by FHLB examiner
Mims of a conversation (whether by telephone is not clear) with

57
 Neither Frye nor Crouch has discharged the burden, especially

heavy prior to trial, of showing that at trial they almost

certainly will suffer substantial, actual prejudice by reason of

the claimed undue delay in the return of the indictment. No more

than potential, speculative prejudice is shown. To the extent that

the district court found otherwise, its findings are not supported

by the record and are clearly erroneous. While events at trial may

demonstrate actual and substantial prejudice, at present Frye’s and

Frye on July 23, 1986. However, before the magistrate judge,
Frye’s counsel took the position that this memorandum did not
incriminate Frye, stating “. . . it nowhere says that Mike Frye was
a nominee. It does say that Crouch and Ferguson put the whole deal
together and he [Frye] didn’t even have to go to Delta to sign the
loan papers, which is all true.” We have no assurance that Mims
will testify as to what was said in this conversation in any manner
inconsistent with this characterization of it by Frye’s counsel.

Frye also introduced testimony by attorney Knoblock, who wrote
letters in June 1986, purportedly on behalf of J.M.G. Financial, to
Ferguson and Crouch. The letters were on the letterhead of another
attorney with whom Knoblock officed. Knoblock, on being shown the
letters, said he recognized the signature as his. He stated that
he had represented J.M.G. “just for a brief period of time in
1986.” He came to do so at the request of one Dan Croft, a self-
employed mortgage broker. He wrote the letters following a meeting
with Croft, and an attorney Knoblock did not know, who purported to
represent Ferguson, “and some other individual that was
representing J.M.G., I don’t recall the name.” He thinks Croft
told him to write the letters. It must not have been Frye, because
Knoblock testified he did not know Frye and had never met or seen
him prior to testifying at the hearing before the magistrate judge.
He did not know Crouch or who he was. He had met Ferguson. The
letter to Crouch, at Crouch’s law firm, concerned the Delta
$3,950,000 loan to J.M.G. and states, “It was the understanding and
information of JMG that this transaction was to facilitate a sale
from Delta to an undisclosed purchaser, being Mr. R.B. Ferguson.”
Knoblock disposed of all his J.M.G. files in 1991. However, there
is no evidence as to what those files might have contained.
Knoblock did testify that he could not say he ever saw a file
containing those letters. This testimony does not establish
prejudice to Frye. It rather suggests that the government may have
a difficult time tying Frye to the letters. How this will all play
out at trial cannot now be reliably ascertained.

58
Crouch’s claims are premature.

CONCLUSION

We summarize our holdings.

We reject the Townley balancing test and hold that where an

indictment is returned within the statute of limitations,

preindictment delay does not violate due process unless that delay,

in addition to prejudicing the accused, was intentionally brought

about by the government for the purpose of gaining some tactical

advantage over the accused in the contemplated prosecution or for

some other bad faith purpose. The district court having declined

to make any such finding of bad faith,45 accordingly erred in

granting the motion to dismiss the indictment for preindictment

delay.

We further hold that preindictment delay does not entitle the

accused to dismissal of the indictment on due process grounds

unless he demonstrates that the improper delay caused actual,

substantial prejudice to his defense. The requisite prejudice may

not be presumed, rebuttably or otherwise, merely from the length of

the delay, and the district court erred in holding to the contrary

and in partially relying on presumed prejudice. Moreover, because

actual, substantial prejudice to the defense at trial is required,

a showing of mere potential or possible trial prejudice does not

suffice. This means that dismissal on such a basis prior to trial

45
As noted, the district court correctly recognized that the
record “will not justify” any such finding of bad faith. However,
because of discovery and evidentiary limitations imposed by the
magistrate judge, the district court declined to rule out
governmental bad faith.

59
will rarely (if ever) be appropriate. In all but the clearest and

most indisputable cases, the district court, even though inclined

to grant such a motion, should nevertheless normally withhold doing

so until after verdict, when the assessment of actual, substantial

trial prejudice can more accurately be made. Here the evidence is

wholly insufficient to sustain a finding that Crouch and Frye

will——not merely likely may——suffer actual and substantial prejudice

to their defense at trial. To the extent the district court found

to the contrary, its findings are clearly erroneous. “Events of

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

appellees’ due process claims are speculative and premature.”

Marion at 466.

We accordingly reverse the district court’s order dismissing

the indictment and remand for further proceedings consistent

herewith.46

REVERSED and REMANDED

46
The district court shall not grant the motion to dismiss
unless and until the events of trial demonstrate, and the court
finds, actual and substantial trial prejudice to the defense as the
result of improper and undue delay, and also finds, on the basis of
adequate additional evidence, that the delay was intentionally
brought about by the government for the purpose of gaining some
tactical advantage over the defendants or for some other bad faith
purpose.

60