U.S. v. Crouch

Decision Date20 April 1995
Docket NumberNo. 93-7719,93-7719
Citation51 F.3d 480
PartiesUNITED STATES of America, Plaintiff-Appellant, v. A. Guy CROUCH, III and Michael J. Frye, Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Guy L. Womack, James L. Turner, Paula C. Offenhauser, Asst. U.S. Attys., Gaynelle Griffin Jones, U.S. Atty., Houston, TX, for appellant.

Neil Colman McCabe, Professor, S. Texas College of Law, Houston, TX, Jimmy Phillips, Angleton, TX, Steven Jay Rozan, Houston, TX, for appellee Crouch.

Theo W. Pinson, Pinson & Bussey, William E. King, Houston, TX, for appellee Frye.

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

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

POLITZ, Chief Judge:

The district court dismissed indictments against A. Guy Crouch, III and Michael J. Frye which arose out of alleged illegal banking activity. For the reasons assigned, we affirm.

Background

In March of 1986, while examining the records of Delta Savings Association of Texas, a failed institution, federal investigators discovered that the institution had been engaged in a "cash for trash" scheme. 1 Delta officials violated federal regulations which prohibited excessive loans to one borrower by using bogus nominee borrowers who bore no personal liability for the loans contracted.

Criminal referrals issued for Carl Gerjes, Delta's president, Robert Ferguson, an involved real estate investor, Crouch, Delta's attorney and chairman of its board of directors, and Frye who allegedly acted through a corporate alter ego, JMG Financial, as a nominee borrower for Ferguson. In 1986 the government began an investigation into Delta's activities, focusing on Gerjes and Ferguson, leading to the conviction of Gerjes in 1989 and his guilty plea conviction on separate but related offenses in 1992, as well as Ferguson's conviction in 1992. On November 12, 1992 a 19-count indictment was handed up against Crouch and Frye, charging misapplication of funds, 18 U.S.C. Secs. 2, 657; false entries, 18 U.S.C. Secs. 2, 1006; false statements, 18 U.S.C. Secs. 2, 1014; and bank fraud, 18 U.S.C. Secs. 2, 1344.

Citing the eight-plus years between the alleged crimes in 1984-85 and the indictment, Crouch and Frye asserted prejudice from the pre-indictment delay and moved for dismissal. A magistrate judge recommended dismissal because of both presumptive and actual prejudice caused by the passage of time. Following a de novo review the district court adopted the recommendation, holding that defendants had suffered presumptive prejudice because of the delay and finding actual prejudice resulting from the delay due to the unavailability of testimony because of death and memory loss and the disappearance of exculpatory records. Applying the balancing test directed in United States v. Brand 2 and in United States v. Townley 3 for claimed violations of due process resulting from pre-indictment delay, the court found that the government's assigned reason for delay, the lack of resources, did not outweigh the prejudice suffered by Crouch and Frye. The court dismissed the indictment; the government timely appealed.

Analysis

The government faults the district court's use of the Brand/ Townley balancing test. Even assuming Crouch and Frye were able to show prejudice, the government contends that their inability to demonstrate prosecutorial bad faith for the dilatory indictment defeated their motion for dismissal. It cites post-Townley decisions for the proposition that to establish a due process violation based on pre-indictment delay a defendant must show that the prosecutor intentionally delayed the indictment to gain tactical advantage. 4

In United States v. Marion 5 the Supreme Court held that although the primary protection against undue delay prior to arrest, indictment, or information is the appropriate statute of limitations, the due process clause of the fifth amendment offers some protection from prejudice to a defendant's case arising from this delay. The Court accepted, as an example, the government's contention that if it be shown that the government had created the prejudicial delay as "an intentional device to gain tactical advantage over the accused," 6 due process would require the automatic dismissal of the indictment.

Following Marion we began the development of a test for violations of due process in this context. Despite the Marion Court's express refusal to "determine when and in what circumstances actual prejudice resulting from pre-accusation delays requires the dismissal of the prosecution," 7 in dicta we used the statement that a showing of prosecutorial bad faith required automatic dismissal for the very different proposition that such a showing was a sine qua non for the finding of a due process violation. 8 Because the defendants in those cases were unable to make a showing of prejudice due to delay, we did not apply this statement in a dispositive ruling.

The Supreme Court next considered this issue in United States v. Lovasco, 9 stating that proof of prejudice was "a necessary but not sufficient element of a due process claim, and that the due process inquiry must consider the reasons for the delay as well as the prejudice to the accused," 10 including the inquiry whether the delayed prosecution violates "elementary standards of fair play and decency" 11 and "fundamental conceptions of justice which lie at the base of our civil and political institutions." 12 After balancing the prejudice caused by an 18-month delay against the government's reason for delay--its continuing investigation--the Lovasco Court upheld dismissal of the indictment.

The Lovasco Court also noted that following Marion neither it nor any lower appellate court had "had a sustained opportunity to consider the constitutional significance of various reasons for delay." 13 Instead of passing upon this issue, the Court opted to leave such rulings to future decisions of the lower courts applying "the [aforementioned] settled principles of due process." 14

In Brand, one of our first cases applying the teaching of Lovasco, after noting that actual prejudice must be shown as a threshold matter, we stated that Lovasco did "not indicate that governmental interests not amounting to an intentional tactical delay will automatically justify" 15 such prejudice. Rather, we concluded that Lovasco stood for balancing the government's need for the delay against the actual prejudice suffered by the defendant.

We next addressed the issue in Townley and crystallized the test for due process violations thusly:

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

The Townley court left no doubt that a showing of bad faith by the government was not a requisite for a due process violation. We noted:

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

Several subsequent decisions overlooked Townley's holding and relied on the dicta from pre-Lovasco cases for stating that pre-indictment delay may result in dismissal of an indictment only when the delay resulted from an ill-intentioned act by the government. 18 In accordance with our long-established rule, we are bound to follow the earliest dispositive articulation of a rule as the decision of one "panel may not overrule the decision, right or wrong, of a prior panel in the absence of en banc reconsideration or superseding decision of the Supreme Court." 19 We therefore must apply the Brand/ Townley, balancing test as the binding precedent. The district court correctly relied upon the holdings of Brand and Townley in its evaluation of the merits of defendants' motion to dismiss.

We find merit in one part of the government's challenge to the district court's ruling, specifically its holding that the passage of approximately eight years from the alleged commission of the crimes to the issuance of the indictment was presumptively prejudicial. As authority the trial court cited Doggett v. United States, 20 which involved post-indictment delay, as support for the existence of presumptive prejudice in this pre-indictment delay case. We find this reliance misplaced as "pre-indictment delay does not raise a Sixth Amendment issue, but is instead examined under the due process clause of the Fifth Amendment." 21

Our precedents require that the triggering prejudice be actual, not presumptive. Twenty years ago we stated that

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

Townley and subsequent decisions 23 recognized that the defendant must show proof of actual prejudice as a threshold requirement. The district court's conclusion that there was presumptive prejudice from the mere passage of time was...

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13 cases
  • U.S. v. Crouch
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 30 May 1996
    ...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," bu......
  • U.S. v. Dote
    • United States
    • U.S. District Court — Northern District of Illinois
    • 5 February 2001
    ...delay. See United States v. Crouch, 835 F.Supp. 938 (S.D.Tex. 1993). The Fifth Circuit explicitly rejected this reasoning, 51 F.3d 480, 484 (5th Cir. 1995) ("[W]e find this reliance [on Doggett] misplaced as `pre-indictment delay does not raise a Sixth Amendment issue, but is instead examin......
  • United States v. Taylor
    • United States
    • U.S. District Court — Eastern District of Michigan
    • 26 April 2023
    ...obtain pre-trial release; and Mr. Taylor has suffered and continues to suffer mental and emotional distress as a result of the delays. [sic] (Id. at In response, the Government largely focuses on Defendant's ongoing state cases, five of which were active in May of 2022. (ECF No. 26, PageID.......
  • Barrett v. U.S.
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    • U.S. Court of Appeals — Fifth Circuit
    • 27 November 1996
    ... ... United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541-42, 92 L.Ed. 746 (1948) ...         Dr. Barrett would have us review the district court's holdings de novo, arguing that the court violated the law of the case doctrine in rejecting his evidence on the actual ... ...
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1 books & journal articles
  • THE WAITING GAME: HOW PREINDICTMENT DELAY THREATENS DUE PROCESS AND FAIR TRIALS.
    • United States
    • South Dakota Law Review Vol. 66 No. 3, March 2021
    • 22 March 2021
    ...Doggett v. United States, 505 U.S. 647, 655 (1992). See generally Lovasco, 431 U.S. 783; Marion, 404 U.S. 307; United States v. Crouch, 51 F.3d 480 (5th Cir. 1995); Jackson, 504 F.2d 337; Taylor v. United States, 238 F.2d 259 (D.C. Cir. 1956) (defining, collectively, "preindictment delay");......

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