U.S. v. Foxman

• Decision Date: 11 July 1996
• Docket Number: No. 94-5183,94-5183
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Michael D. FOXMAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1220

87 F.3d 1220

UNITED STATES of America, Plaintiff-Appellant, v. Michael D. FOXMAN, Defendant-Appellee.

No. 94-5183.

United States Court of Appeals Eleventh Circuit.

July 11, 1996.

Lothar R. Genge, Linda Collins Hertz, Anne Ruth Schultz, Asst. U.S. Attorneys, Ft. Lauderdale, FL, for appellant.

Martin R. Raskin, Jane S. Raskin, Coconut Grove, FL, for appellee.

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

Before EDMONDSON, Circuit Judge, and FAY and GIBSON ^*, Senior Circuit Judges.

EDMONDSON, Circuit Judge:

Today we deal with one aspect of Sunrise Savings & Loan Association's failure: the indictment of former Sunrise chairman Michael Foxman. Foxman, who left Sunrise in 1983, was indicted with several of his former colleagues in 1993. Before trial, the district judge dismissed the single count against Foxman. The judge concluded that the indictment was for too long delayed. We remand for application of the established legal standard to the pre-indictment delay claim. We also remand for further examination of Foxman's duplicity argument, which was raised below but was not the basis for the dismissal of the indictment.

I.

Michael Foxman and other members of a Philadelphia-based law firm formed Sunrise in 1979. Foxman was installed as Chairman, and he selected Robert Jacoby to be president. Sunrise almost immediately embarked on certain courses of conduct which led to the thrift's insolvency and to criminal charges (as well as civil suits) against Sunrise's officers, lawyers and biggest borrowers.

The government says that Michael Foxman was involved in a conspiracy to misapply Sunrise funds. The conspiracy is said to have started with the diversion of money from Sunrise to Crusader (a Pennsylvania savings and loan) and continued with a plan to evade federal loans-to-one-borrower regulations. The loans-to-one-borrower violations involved Sunrise's biggest customers, William Frederick and Thomas Moye--large scale developers and profligate spenders of borrowed money. (Persons concerned about Frederick and Moye's relationship with Sunrise should see the related case of U.S. v. Jacoby, 955 F.2d 1527 (11th Cir.1992).) Foxman resigned as Chairman in 1983; he was not thereafter involved in Sunrise's day-to-day operations.

Sunrise became insolvent in 1985. Regulators took over, and a grand jury began investigating. In 1987, Frederick, Moye and three former Sunrise officers (including Jacoby) were indicted. Before trial, Frederick and Moye pleaded guilty. At trial, Jacoby and another officer were convicted; and we affirmed their convictions. See id. Then, the government granted Jacoby immunity to force him to testify before the grand jury. In 1992, Jacoby told the jury about the Crusader diversions. The government, which had been investigating Sunrise for years, says this testimony was the first link between Foxman and misuse of Sunrise funds.

In 1993, Foxman and four others were charged in a superseding multi-count indictment. Count I, the only one implicating Foxman, charged a single conspiracy composed of both the Crusader diversion and the Frederick and Moye dealings. Foxman was charged with no substantive counts because he left Sunrise before the Frederick and Moye dealings and because prosecutions based directly on the Crusader diversions became time barred back in 1988.

After hearing argument and receiving proffers from the lawyers, the district judge--who had also presided over the Jacoby trial--dismissed the indictment against Foxman because of pre-indictment delay. The district judge also discussed Foxman's argument that Count I was duplicitous: two separate conspiracies were misjoined in a single count so as to come within the statute of limitations.

II.

For purposes of this appeal, we assume that the Crusader diversion and the loans-to-one-borrower matter could have been proved to have been parts of a single conspiracy. ¹ So, we will not discuss in detail Foxman's argument that the indictment should be dismissed as duplicitous; and, the only issue we face is whether the indictment of Foxman was lawfully dismissed on the ground of delay. We review the dismissal of the indictment for an abuse of discretion. See U.S. v. Dyal, 868 F.2d 424, 429-30 (11th Cir.1989). But, the defendant bears a heavy burden in showing a dismissal is appropriate. See U.S. v. Huntley, 976 F.2d 1287, 1290 (9th Cir.1992).

The limit on pre-indictment delay is usually set by the statute of limitations. But, the Due Process Clause can bar an indictment even when the indictment is brought within the limitation period. See generally U.S. v. Marion, 404 U.S. 307, 323-27, 92 S.Ct. 455, 465-66, 30 L.Ed.2d 468 (1971) and U.S. v. Lovasco, 431 U.S. 783, 788-91, 97 S.Ct. 2044, 2048-49, 52 L.Ed.2d 752 (1977). Under Lovasco and Marion and our applications of these cases, see, e.g., U.S. v. Hayes, 40 F.3d 362, 365 (11th Cir.1994); U.S. v. Benson, 846 F.2d 1338, 1340 (11th Cir.1988); and Stoner v. Graddick, 751 F.2d 1535, 1541 (11th Cir.1985), for this dismissal to have been proper, Foxman must have shown that pre-indictment delay caused him actual substantial prejudice and that the delay was the product of a deliberate act by the government designed to gain a tactical advantage.

But, the district judge did not apply both parts of this two-part test because he concluded that Doggett v. U.S., 505 U.S. 647, 112 S.Ct. 2686, 120 L.Ed.2d 520 (1992), altered the due process analysis and permitted the dismissal of the indictment whether or not the delay was the product of a deliberate act by the government designed to gain a tactical advantage. Doggett, however, is a Sixth Amendment case, and we agree with the Ninth Circuit, see U.S. v. Bischel, 61 F.3d 1429, 1436 (9th Cir.1995), that Doggett does not alter the law governing due process challenges to pre-indictment delay.

For due process to have required dismissal, the delay must have resulted in actual substantial prejudice to Foxman. We read the order of the district court to say that he found that actual substantial prejudice existed. An abuse of discretion exists on this point only if this finding is clearly erroneous. U.S. v. Huntley, 976 F.2d 1287, 1290 (9th Cir.1992). Given the number of Foxman's best witnesses who died between 1983 and 1993 (and that the statute of limitations for substantive charges against Foxman expired in 1988), we cannot say the district judge was clearly wrong. See U.S. v. Mills, 704 F.2d 1553, 1557 (11th Cir.1983) (death of witness can lead to substantial prejudice). Most of the evidence in the case against Foxman was to be testimonial. And, Foxman--unlike other defendants--was not under active investigation in the 1980's; therefore he had little incentive to preserve evidence.

But, substantial prejudice from delay, standing alone, does not violate due process. See id. The delay must also be the product of a deliberate act by the government designed to gain a tactical advantage. Our review of the record suggests support exists for a finding that at least part of the delay in this case is of this kind. ² The government believed that Jacoby would implicate others when he was forced to testify; and the government waited until Jacoby's own convictions were affirmed to immunize him. This decision delayed the indictment of Foxman. And, this delay might be the product of prosecutorial conduct designed to obtain a tactical advantage: it seems the reason for the delay might have been the prosecutor's belief that Jacoby would be a better witness against those he implicated once his convictions were affirmed. ³ If this motivation was the reason for the delay, the litigation strategy (that is, the pursuit of the advantage of Jacoby having already been finally convicted) seems to have inherently involved the risk that Jacoby--when he ultimately was immunized after his appeal--would reveal misdeeds prior in time to those the government anticipated Jacoby would reveal. We would have little difficulty in permitting the foreseeable consequences of a deliberately chosen litigation strategy to be visited upon the government.

But, a problem exists with our concluding that the government delayed the indictment to gain a tactical advantage over Foxman. The government tells u...