U.S. v. Mays, s. 75-3083
| Citation | 549 F.2d 670 |
| Decision Date | 03 March 1977 |
| Docket Number | Nos. 75-3083,75-3084,s. 75-3083 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. Cecil R. MAYS, Robert Jack Coltrane, Buddy Herman Mathis, Defendants- Appellees. UNITED STATES of America, Plaintiff-Appellant, v. Robert Jack COLTRANE, Cecil R. Mays, J. Robert West, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Stephen V. Wilson, Asst. U. S. Atty., Los Angeles, Cal., for the government.
Stephen D. Miller, Beverly Hills, Cal., for Mays.
Appeal from the United States District Court for the Central District of California.
Before BARNES, ELY and WRIGHT, Circuit Judges.
This appeal is from the dismissal before trial of certain counts in two federal indictments. The trial court ruled that the dismissal was constitutionally required by reason of alleged prejudice to the defendants due to pre-indictment delay of four and one half years between the completion of the acts charged and the return of the indictments by a Federal Grand Jury. The government pursuant to 18 U.S.C. § 3731 appeals the dismissals by the district court of the two indictments, Nos. 74-677 and 74-676.
1. Indictment No. 74-677 includes thirty-two counts consisting of conspiracy (18 U.S.C. § 371), misapplication of bank funds (18 U.S.C. § 656), false entry in a bank statement (18 U.S.C. § 1005), mail fraud (18 U.S.C. § 1341), fraud by wire (18 U.S.C. § 1343), interstate transportation of monies obtained by fraud (18 U.S.C. § 2314), and aiding and abetting (18 U.S.C. § 2). Count 1 alleges a conspiracy between West, who was the Chairman of the Board and majority stockholder of the Southland National Bank (herein "Southland Bank" or "Southland"), and Coltrane and Mays. The primary objectives of the conspiracy were the purchase from West of controlling stock interest in Southland Bank by Coltrane and Mays, using the bank's own money through a scheme of allegedly fraudulently obtained loans, and a subsequent improper use of Southland Bank funds for the benefit of American West Nursing Centers, Inc. (herein "Nursing Centers") a corporation formed by Mays and others on March 17, 1969. Coltrane and Mays agreed to buy, but did not have sufficient funds to effectuate the purchase of, West's stock. It is alleged that they therefore conspired with West in an arrangement whereby West would approve loans to nominees of Coltrane and Mays, the proceeds from which would then be used to buy West's stock. Pursuant to the scheme, Coltrane and Mays allegedly caused false loan applications to be filed, and West would obtain their approval and record them in Southland Bank's records. Once in control of Southland Bank, Coltrane and Mays allegedly operated the bank solely for the benefit of themselves and their businesses, and in violation of various banking rules (e. g., exceeding Southland Bank's legal lending limit; see 12 U.S.C. §§ 21 et seq. and 221 et seq.). Counts 2 through 4 delineate an alleged scheme whereby Coltrane and Mays obtained a $100,000 loan from the Security National Bank of Reno, Nevada, through alleged false representations made via letters delivered by the U.S. postal service and by wire, which caused the above sum to be transported in interstate commerce in violation of statutes against mail fraud (Count 2), fraud by wire (Count 3), and the interstate transportation of money obtained by false representations (Count 4). Counts 5 through 23 and 26 through 30 detail the alleged fraudulent loans made by the defendants to the nominees in violation of 18 U.S.C. § 656 and 18 U.S.C. § 1005, and 18 U.S.C. § 2 aiding and abetting. Counts 24 and 25 relate to Coltrane's alleged individual misapplication of approximately $10,000 in Southland Bank's funds, and his falsification of bank records pursuant thereto. Counts 31 and 32 relate to Mays' alleged individual misapplication of approximately $30,000, and his falsification of bank records.
2. Indictment No. 74-676 includes ten counts consisting of conspiracy, misapplication of bank funds and false entries in bank statements. Count 2 charges a conspiracy between Coltrane, Mays and Mathis, the latter being a banker who controlled the Deposit National Bank (herein "Alabama Bank") in Prichard, Alabama. After Coltrane and Mays obtained majority shares in Southland Bank, they used approximately $500,000 of bank funds to pay off certain debts of their related businesses, principally those of Nursing Centers and Southland Financial Services. To accomplish this, they allegedly caused loan papers to be prepared for six nominees. Said papers were fraudulent because the money was not intended for the individuals named or for the purposes stated therein. The loan papers were sent to the Alabama Bank. Rather than funding the loans to the named persons, Mathis simply drew up a $500,000 certificate of deposit payable to Southland Bank which was entered on its books as an asset. Likewise, Coltrane and Mays caused a similar certificate and loans to be made to the Alabama Bank for Mathis' benefit. Count 2 of the indictment charges Coltrane and Mays with the misapplication of bank funds. Counts 3 through 10 relate to the falsification of bank records and statements concomitant with the above scheme.
The overt and substantive charges in Indictment No. 74-677 are alleged to have occurred between March 17, 1969 and October 10, 1969. Those in Indictment No. 74-676 are alleged as occurring between October 6, 1969 and November 17, 1969.
A regularly scheduled examination of Southland Bank by the National Bank Examiners (herein "Examiners") was completed in August 12, 1969 and a report was issued to the United States Comptroller of Currency (herein "Comptroller") and received by him on September 2, 1969. Certain statements which were ultimately used to frame the charges in Indictment No. 74-677 were contained in that report. A second examination by the Examiners was completed on January 16, 1970 and a report which covered charges contained in both indictments was received by the Comptroller on February 2, 1970. An examination of the Alabama Bank by the Examiners was made in November, 1969.
On November 19 and 20, 1969 the Examiners advised the Federal Bureau of Investigation ("FBI") of certain irregularities and possible fraudulent action in the operations of Southland. On December 10, 1969, the Examiners notified the United States Attorney for the Central District of California (herein "U. S. Attorney") of some of those improprieties. On January 23, 1970, Assistant U. S. Attorney Tomlinson notified the FBI that prior to the rendition of any "prosecutive" opinion by his office, he desired to receive a copy of the Examiners' report and a preliminary FBI report. On April 9, 1970, Tomlinson stated that he would decline to prosecute the case as there did not appear to be sufficient facts to indicate a successful prosecution of the case. On June 12, 1970, the Department of Justice requested a further explanation from the U. S. Attorney's Office on its refusal to prosecute.
Between July, 1970 and March, 1973, apart from three meetings on the matter, the U. S. Attorney's Office did not actively pursue the prosecution of the cases. During that same period, the FBI's involvement was limited to a series of interviews with prospective witnesses which lasted a period of about two months. Between January 23, 1970 and July 10, 1972, no time was spent on this investigation by the Comptroller's Office. Thereafter, 25 hours were spent in 1972 and 473 hours in 1973.
On or about March, 1973, the U. S. Attorney's Office took a more active role in the prosecution of the case. By December 19, 1973, witnesses and evidence were presented to a Federal Grand Jury. The indictments were returned on May 6, 1974.
The defendants were arraigned in both cases on June 3, 1974. On June 6, 1974, the cases were consolidated. On October 11, 1974, the district court judge granted the defendants' motion for discovery and ordered the government to turn over its records as to the prosecution of the cases. Subsequently, the defendants moved to dismiss for pre-indictment delay. On July 30, 1975, the district court issued an order dismissing certain of the counts because of pre-indictment delay.
The defendants asserted that their defense had suffered actual prejudice due to the pre-indictment delay caused by the government. They cited two forms of such prejudice, the deaths of three material witnesses and the dimming of memories of many of the live witnesses. 1
D. Herrick and F. Fleming died in the same plane crash in January, 1974. Norman Stanley died in January, 1975. Herrick was Secretary-treasurer of the Nursing Centers and a member of its Board of Directors. He was in charge of the syndications of real estate for Nursing Centers. One of his duties was the preparation of financial statements, loan applications and other documentation necessary for loans from Southland. It was stated that Herrick was the one who assisted investors in Nursing Centers to obtain their loans from Southland. Herrick's involvement in the above capacities is fairly well documented in the record. 2 There was some evidence of the involvement of Coltrane and Mays in this stage of the loan process. 3
Both Fleming and Stanley were Herrick's assistants in those financial aspects. They helped in the preparation of the forms and were also involved in obtaining signatures on the documents.
The defendants also asserted that the memories of many key witnesses had lapsed as to certain material facts and events due to the extended passage of time. Such claim of dimming of memories on the part of the witnesses is supported by the record, i. e., in the testimony of such witnesses to that effect before the Grand Jury and in the FBI interview reports.
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