United States v. Stoller ( 1996 )

UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
No. 95-2175
UNITED STATES OF AMERICA,
Appellee,
v.
ROBERT S. STOLLER,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Selya, Circuit Judge,
Aldrich and Coffin, Senior Circuit Judges.
John A. MacFadyen, with whom Richard M. Egbert was on brief,
for appellant.
Anita S. Lichtblau, Trial Attorney, United States Dep't of
Justice, with whom Donald K. Stern, United States Attorney, and
Mark D. Seltzer, Director, New England Bank Fraud Task Force,
were on brief, for the United States.
February 29, 1996
SELYA, Circuit Judge. This appeal requires us to
SELYA, Circuit Judge.
explore a shadowy corner of the Double Jeopardy Clause, dimly lit
by a trilogy of recent Supreme Court cases. Concluding, as we
do, that an administrative sanction imposed by the Federal
Deposit Insurance Corporation (FDIC) does not comprise
"punishment" within the purview of the Clause, we uphold the
district court's denial of a motion to dismiss criminal charges
later lodged against the same individual.
I. BACKGROUND
I. BACKGROUND
Following chronological order, we recount the details
of the administrative proceeding and then discuss the criminal
case.
A. The Administrative Proceeding.
A. The Administrative Proceeding.
From 1975 to 1990, defendant-appellant Robert S.
Stoller toiled as the chief executive officer of the Coolidge
Corner Cooperative Bank (the Bank). In 1986, the Bank became
federally insured. Thereafter, Stoller caused it to make loans
to several real estate trusts with which he was affiliated. The
loans soured and the Bank sustained heavy losses.
In 1990, the FDIC instituted a debarment proceeding
against Stoller. The FDIC charged, and an administrative law
judge (ALJ) found, that the Bank underwrote the suspect loans
without appropriate disclosure and in violation of Regulation O,
12 C.F.R. 215 (a rule that caps the amount of credit a
federally insured institution may extend to insiders and imposes
lending limits on other extensions of credit). The ALJ concluded
2
that Stoller's transgressions demonstrated a willful and
persistent disregard for the Bank's soundness, and therefore
warranted an order of proscription under 12 U.S.C. 1818(e).1
On administrative review, the FDIC's board of directors (the
Board) affirmed the ALJ's factual determinations and approved his
recommended order. Stoller requested reconsideration and
clarification. On September 22, 1992, the Board issued a revised
decision upholding the debarment order in slightly altered form:
in its final version, the order prevents Stoller (who is an
attorney) from serving as an officer or director of, exercising
control over, or acting as counsel to, any federally insured
financial institution.
B. The Criminal Case.
B. The Criminal Case.
In January 1995, a federal grand jury indicted Stoller
for divers violations of federal banking laws, including nine
counts of misapplying bank funds, see 18 U.S.C. 656; thirty-one
counts of unlawfully receiving loan-procurement commissions, see
id. 215; and eight counts of making false entries, see id.
1005. Stoller promptly moved to dismiss the first nine counts of
the indictment on double jeopardy grounds. The district court
denied the motion, concluding that the debarment order did not
constitute punishment in the relevant constitutional sense. See
United States v. Stoller, 906 F. Supp. 39 (D. Mass. 1995). This
appeal followed.
1This statute and the criminal statutes underpinning the
later indictment are reprinted in the appendix.
3
II. APPELLATE JURISDICTION
II. APPELLATE JURISDICTION
As a general rule, federal appellate courts have
jurisdiction only over final orders and judgments of district
courts, and not over interlocutory decisions. See 28 U.S.C.
1291. In Abney v. United States, 431 U.S. 651 (1977), the
Supreme Court carved an exception to this rule for pretrial
refusals to dismiss criminal charges on double jeopardy grounds.
Emphasizing that the Double Jeopardy Clause is a "guarantee
against being twice put to trial for the same offense," id. at
661, the Court held that "pretrial orders rejecting claims of
former jeopardy . . . constitute ``final decisions' and thus
satisfy the jurisdictional prerequisites of 1291," id. at 662.
It is possible to read too much into Abney. The Double
Jeopardy Clause states that no person "shall . . . be subject for
the same offence to be twice put in jeopardy of life or limb."
U.S. Const. amend. V. This protection is threefold: "it
safeguards an individual against (1) a second prosecution for the
same offense, following an acquittal; (2) a second prosecution
for the same offense, following a conviction; and (3) multiple
punishments for the same offense." United States v. Rivera-
Martinez, 931 F.2d 148, 152 (1st Cir.), cert. denied, 502 U.S.
862 (1991). Abney spoke to a situation involving multiple
prosecutions. Cases that involve multiple punishments arguably
raise different jurisdictional concerns for appellate courts.
In United States v. Ramirez-Burgos, 44 F.3d 17 (1st
Cir. 1995), this court dismissed an interlocutory appeal stemming
4
from the rejection of a multiple punishments claim asserted in
connection with parallel counts contained in a single indictment.
See id. at 18. We ruled that the defendant's right not to be
punished twice could be vindicated adequately through a
subsequent, end-of-case appeal, and distinguished those
interlocutory double jeopardy appeals (like Abney) that demand
final resolution prior to trial because the defendant advances a
claim alleging impermissible multiple prosecutions. See id. at
18-19.
Stoller's case falls somewhere between Abney and
Ramirez-Burgos. Unlike in Abney, his double jeopardy claim rests
on the prospect of multiple punishments rather than the fear of
multiple prosecutions. Unlike in Ramirez-Burgos, however, the
alleged multiple punishments arise in the course of two separate
and successive proceedings rather than within a single
proceeding. To complicate matters further, the fate of Ramirez-
Burgos is uncertain in light of the Supreme Court's recent
decision in Witte v. United States, 115 S. Ct. 2199 (1995).2
2In Witte, the defendant moved to dismiss an indictment on
the ground that the conduct underlying it had already been taken
into account when he was sentenced on a previous charge. The
defendant argued that the prosecution of the new charge subjected
him to multiple punishments for the same offense in violation of
the double jeopardy guarantee. See Witte, 115 S. Ct. at 2204-05.
He convinced the district court but the court of appeals
reversed. 25 F.3d 250, 252 (5th Cir. 1994). On certiorari, the
Supreme Court declared the claim to be "ripe at this stage of the
prosecution although petitioner has not yet been convicted of
the [second charge] because, as we have said, ``courts may not
impose more than one punishment for the same offense and
prosecutors ordinarily may not attempt to secure that punishment
in more than one trial.'" 115 S. Ct. at 2205 (quoting Brown v.
Ohio, 432 U.S. 161, 165 (1977)).
5
Although Witte and Ramirez-Burgos can perhaps be reconciled, the
most obvious basis for harmonizing them the number of
proceedings involved would, if accepted, remove this appeal
from the reach of Ramirez-Burgos. Moreover, at least one circuit
has observed that, under Witte, all double jeopardy appeals that
raise nonfrivolous multiple punishments arguments must now be
considered ripe for immediate review. See United States v.
Baird, 63 F.3d 1213, 1215 & n.4 (3d Cir. 1995), cert. denied,
S. Ct. (1996).
We elect to detour around this Serbonian bog. It is a
familiar tenet that when an appeal presents a jurisdictional
quandary, yet the merits of the underlying issue, if reached,
will in any event be resolved in favor of the party challenging
the court's jurisdiction, then the court may forsake the
jurisdictional riddle and simply dispose of the appeal on the
merits. See Norton v. Mathews, 427 U.S. 524, 530-31 (1976);
Secretary of the Navy v. Avrech, 418 U.S. 676, 677-78 (1974) (per
curiam); United States v. Saccoccia, 58 F.3d 754, 767 n.6 (1st
Cir. 1995); United States v. Connell, 6 F.3d 27, 29 n.3 (1st Cir.
1993). We follow that course, leaving for another day the
questions surrounding the continued vitality of Ramirez-Burgos.
III. THE DOUBLE JEOPARDY CLAIM
III. THE DOUBLE JEOPARDY CLAIM
We confine our discussion to the branch of the Double
Jeopardy Clause that embodies the constitutional protection
6
against multiple punishments.3 Though our analysis proceeds in
three segments, we pause at the brink to acknowledge a few well-
established principles.
First, though former jeopardy is a criminal law
concept, it is by now settled that, if other conditions are met,
either criminal prosecutions or civil proceedings instituted by
the same sovereign may result in punishment sufficient to
implicate the Double Jeopardy Clause. See United States v.
Halper, 490 U.S. 435, 443 (1989). Second, not all civil
sanctions constitute cognizable punishment. To separate wheat
from chaff, an inquiring court must scrutinize a civil sanction
objectively rather than subjectively for, from the defendant's
standpoint, "even remedial sanctions carry the sting of
punishment." Id. at 447 n.7. Third, as long as a civil sanction
constitutes punishment in the relevant sense, it does not matter
if the "multiple" punishment presumably a criminal sentence
precedes the attempt to impose the sanction, or conversely, if
the sanction precedes the attempt to convict the defendant.
Notwithstanding the difference in sequence, the Double Jeopardy
Clause reaches both situations. See United States v. Hudson, 14
F.3d 536, 540 (10th Cir. 1994); United States v. Reed, 937 F.2d
575, 577 n.3 (11th Cir. 1991).
3On appeal, Stoller makes a feeble effort to reformulate his
double jeopardy challenge to encompass the notion of successive
prosecutions. Since he did not raise this theory below, we will
not waste time on it now. See United States v. Slade, 980 F.2d
27, 30 (1st Cir. 1992). In all events, the belated contention
adds nothing of consequence to Stoller's asseverational array.
7
These principles help courts to solve the routine
questions that are posed when civil sanctions are alleged to run
afoul of the Double Jeopardy Clause. Nevertheless, when a court
confronts the task of determining the status of a particular
civil penalty under double jeopardy analysis, extremely
sophisticated questions can sometimes arise. The answers to
those questions may depend on the trilogy of Supreme Court cases
to which we now repair.
A. The Trilogy.
A. The Trilogy.
The seminal case is Halper. There the government
successfully prosecuted criminal charges against a physician who,
it asserted, had defrauded the federal Medicare program on sixty-
five separate occasions. The judge imposed a prison sentence and
a fine. See Halper, 490 U.S. at 437. Thereafter, the government
brought a civil suit against Dr. Halper under the False Claims
Act, 31 U.S.C. 3729-3730, seeking to recover damages plus a
penalty equal to $2,000 per violation. The district judge, after
contrasting the extent of the government's claim for these items
($131,170) with the provable amount of the loss occasioned by Dr.
Halper's defalcations ($585), awarded the government $16,000.
The judge reasoned that a more munificent award would be so
disproportionate as to constitute punishment and would therefore
raise double jeopardy questions. See Halper, 490 U.S. at 438-39.
The Supreme Court ultimately accepted this reasoning,4 finding
4The Court did not affirm, but instead vacated the award and
remanded for a more precise determination of the government's
actual loses. See Halper, 490 U.S. at 452.
8
double jeopardy to be a matter of concern "where a fixed-penalty
provision subjects a[n] . . . offender to a sanction
overwhelmingly disproportionate to the damages he has caused."
Id. at 449.
The Halper Court offered some insights into when
particular civil penalties might be regarded as punishments in
the relevant sense. Making such a determination "requires a
particularized assessment of the penalty imposed and the purposes
the penalty may fairly be said to serve. Simply put, a civil as
well as a criminal sanction constitutes punishment when the
sanction as applied in the individual case serves the goals of
punishment." Id. at 448. Withal, Halper did not brand every
monetary penalty exceeding actual financial loss as punitive per
se. To the contrary, the Court stated that "the Government is
entitled to rough remedial justice, that is, it may demand
compensation according to somewhat imprecise formulas, such as
reasonable liquidated damages or a fixed sum plus double damages,
without being deemed to have imposed a second punishment for the
purpose of double jeopardy analysis." Id. at 446. It is only
when the recovery is "not rationally related to the goal of
making the Government whole" that the prospect of multiple
punishment looms. Id. at 451. It is in this context that the
Halper dichotomy surfaced: Justice Blackmun wrote that "a civil
sanction that cannot fairly be said solely to serve a remedial
purpose, but rather can only be explained as also serving either
retributive or deterrent purposes, is punishment, as we have come
9
to understand the term." Id. at 448.
In Austin v. United States, 113 S. Ct. 2801 (1993), the
Court mulled a constitutional challenge to the civil forfeiture
of property (Austin's home and business) used to facilitate
narcotics transactions. After deciding that the Excessive Fines
Clause, U.S. Const. amend. VIII, reached punitive sanctions
levied in nominally civil proceedings, see id. at 2805-06,
Justice Blackmun invoked his own invention the Halper dichotomy
as an aid in determining how a particular sanction might be
characterized. Responding to concerns articulated by Justices
Scalia and Kennedy (each of whom concurred in the judgment but
wrote separately), Justice Blackmun suggested that under Halper
"the question is whether forfeiture serves in part to punish, and
one need not exclude the possibility that forfeiture serves other
purposes to reach that conclusion." Id. at 2810 n.12 (emphasis
in original). While Justice Blackmun acknowledged that "the
forfeiture of contraband itself may be characterized as remedial
because it removes dangerous or illegal items from society," he
declined to extend that reasoning to the sovereign's confiscation
of a defendant's home and business (even though drug trafficking
may have occurred there). Id. at 2811. Moreover, "the dramatic
variations in the value of . . . property forfeitable" under the
applicable civil forfeiture statutes undermined any serious claim
that such forfeitures merely provided appropriate compensation
for the government's losses. Id. at 2812. In other words,
forfeitures of random magnitude were punitive in nature mainly
10
because of sheer vagariousness.5
The capstone of the trilogy is Department of Revenue v.
Kurth Ranch, 114 S. Ct. 1937 (1994). There the Supreme Court
revisited its double jeopardy jurisprudence and found that a
Montana tax on the possession of illegal drugs constituted a
punishment. See id. at 1948. Justice Stevens, writing for the
majority, abjured the Halper dichotomy. He explained this shift
of focus on the basis that "Halper's method of determining
whether the exaction was remedial or punitive simply does not
work in the case of a tax statute." Id. (citation and internal
quotation marks omitted).6
In lieu of the inelastic Halper dichotomy the Kurth
Ranch Court advocated a more flexible approach and undertook to
evaluate the defendant's double jeopardy claim through an
examination of the aggregate circumstances surrounding the
imposition of the tax. See id. at 1946-48. Marshaling the
pertinent facts, the Court remarked the tax's high rate, obvious
deterrent purpose, and linkage with the taxpayer's commission of
a drug-related crime, see id. at 1946-47, and took particular
5Austin is likely not the last word on civil forfeitures in
these purlieus. The Court has taken certiorari in two forfeiture
cases that feature double jeopardy challenges. See United States
v. Ursery, 59 F.3d 568 (6th Cir. 1995), cert. granted, 116 S. Ct.
762 (1996); United States v. $405,089.23, 56 F.3d 41 (9th Cir.
1995), cert. granted, 116 S. Ct. 762 (1996).
6Elaborating on this theme, Chief Justice Rehnquist (with
whom the majority agreed on this point) explained that "the
purpose of a tax statute is not to recover the costs incurred by
the government for bringing someone to book for some violation of
law, but is instead to either raise revenue, deter conduct, or
both." Id. at 1949 (Rehnquist, C.J., dissenting).
11
note of the fact that the property to be taxed was no longer in
the taxpayer's possession, see id. at 1948. Accordingly, the
Court judged the tax to be punitive and held that its assessment
after the taxpayer had been convicted and sentenced for the
underlying narcotics offense would constitute double jeopardy.
See id.
B. The Analytic Framework.
B. The Analytic Framework.
The threshold question is whether the Halper dichotomy
furnishes the beacon by which we must steer in evaluating
Stoller's double jeopardy claim. We hold that the dichotomy
the Halper Court's litmus test for determining the nature of a
civil sanction is limited to cases involving fines,
forfeitures, and other monetary penalties designed to make the
sovereign whole for harm or loss that is quantifiable in actual
or approximate monetary terms. In other cases, the preferred
method of analysis is the totality-of-the-circumstances test
employed in Kurth Ranch. Thus, the Halper dichotomy is
inapposite in the typical debarment case (as here).
1. In Kurth Ranch, 114 S. Ct. at 1948, the Court
1.
recognized the limitations of the dichotomy conceived in Halper
and nourished in Austin. The Halper dichotomy is serviceable in
the context of a fine, forfeiture, or other monetary penalty that
is itself quantifiable in dollars and is intended to correspond
with a quantifiable loss. In such situations, a simple
mathematical computation reveals with some degree of precision
12
whether the penalty is in proportion to the misconduct.7 This
comparison, in turn, determines the nature of the sanction: the
sanction is either restitutionary in an approximate sense (and,
hence, remedial) or it is not (and, hence, punitive). This is a
practical, easily administered rule of thumb but it operates
satisfactorily only because the extent to which a monetary
exaction exceeds actual loss is quantifiable. Where that is so
as in Halper the test works; but in other kinds of cases as
in Kurth Ranch and here the dichotomy is dysfunctional.8
We think that Halper itself recognized these
limitations. The holding of the Halper Court a holding that
appeared in the very next sentence following the sentence that
framed the dichotomy is "that under the Double Jeopardy Clause
a defendant who already has been punished in a criminal
prosecution may not be subjected to an additional civil sanction
to the extent that the second sanction may not fairly be
characterized as remedial, but only as a deterrent or
retribution." 490 U.S. at 448-49. A significantly
7Even in such cases, the dichotomy has a troubling aspect.
See Austin, 113 S. Ct. at 2813 n.* (Scalia, J., concurring)
(questioning the language used by Justice Blackmun because
virtually by definition a "statutory forfeiture must always be at
least ``partly punitive'") (emphasis in original).
8While Kurth Ranch dealt with a quantifiable monetary
penalty a tax it did not involve the satisfaction of a
quantifiable loss. Tax statutes are not usually predicated on a
calculation of damages or costs sustained by the sovereign
through the taxpayer's acts, and the tax statute at issue in
Kurth Ranch (which imposed a tax of the greater of $100 per ounce
of marijuana or ten percent of its market value, see 114 S. Ct.
at 1941) is no exception.
13
disproportionate monetary sanction cannot fairly be characterized
as remedial and, thus, must be regarded as being in service to
punitive ends (deterrence or retribution). Non-monetary
sanctions elude such facile classification. Indeed, many non-
monetary sanctions are hybrids; while not solely in service to
remedial goals, they cannot fairly be characterized as serving
only punitive purposes. We believe it is for this reason that
the Halper Court, knowing many civil sanctions would not fit the
analytic mold it had cast for use in connection with certain
types of monetary penalties, stressed the circumscribed nature of
its holding and styled its dichotomous approach as "a rule for
the rare case." Id. at 449.
We are unwilling to accept Stoller's contention that
Austin signals a widening of Halper's purposefully narrow
holding. In Austin, the applicable statute purportedly entitled
the government to recover property used to facilitate drug
transactions regardless of the property's value in relation to
the amount of drugs purveyed or the losses to the government
occasioned thereby. See Austin, 113 S. Ct. at 2812. The
defendant's challenge to the forfeiture pivoted on the Excessive
Fines Clause, not the Double Jeopardy Clause. See id. at 2812
n.14. Although the Court often interchanges precedents under
these clauses, Austin is a case in which the source of the
challenge possessed decretory significance. In assessing
multiple punishment claims under double jeopardy analysis, the
answer to the dispositive question ultimately depends on whether
14
a sanction is "punitive." By contrast, in pondering a claim
under the Excessive Fines Clause, the answer to the dispositive
question ultimately depends on whether a sanction is "excessive."
See id. To arrive at a judgment on excessiveness, a reviewing
court must necessarily determine if the fine is in proportion to
the harm inflicted and/or the loss sustained and it must apply
that criterion regardless of whether the harm or loss is
quantifiable. See Alexander v. United States, 113 S. Ct. 2766,
2776 (1993). It follows that, in double jeopardy cases involving
non-monetary sanctions, we can read very little into the Austin
Court's commentary.
2. Moving beyond the trilogy, the weight of appellate
2.
authority buttresses our binary conclusion that in double
jeopardy cases (a) the Halper method of analysis is the exception
while the Kurth Ranch method is the general rule, and (b)
strictly speaking, the Halper dichotomy does not apply to non-
monetary sanctions. See, e.g., United States v. Hernandez-
Fundora, 58 F.3d 802, 806 (2d Cir.) (refusing to extend the
Halper dichotomy to a prisoner's claim that his conviction and
sentence on charges of assault, after correctional authorities
had meted out disciplinary segregation for the same offense,
violated the multiple punishments branch of the Double Jeopardy
Clause), cert. denied, 115 S. Ct. 2288 (1995). While the Supreme
Court has not yet decided a case raising a double jeopardy
challenge to a criminal prosecution that stalks behind the
issuance of a debarment order, several courts of appeals have
15
considered and rejected such challenges in the reflection of
Halper.
In Reed, 937 F.2d at 577, the Eleventh Circuit declined
to apply the Halper dichotomy to an employment proscription.
Reed involved a double jeopardy challenge to an indictment for
misappropriation of postal funds that followed a thirty-day
disciplinary suspension imposed by an arbitrator for the same
conduct. The court labelled the Halper dichotomy "inapposite" in
cases involving non-monetary sanctions. Id. at 578. But the
court's rejection of the dichotomy was by no means a rejection of
Halper itself. The court found guidance as do we in the
general principles discussed by the Halper Court, and,
adumbrating the methodology that the Supreme Court later adopted
in Kurth Ranch, the Reed panel examined the overall circumstances
in order to determine whether the proscriptive sanction should be
characterized as punitive or remedial. See id.
The same court also declined to apply Halper in a case
that bears a distinct family resemblance to the case at bar. In
Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992), the court
found no double jeopardy barrier to an administrative order
excluding a physician from participating in the federal Medicare
program for at least five years, notwithstanding that the order
followed the doctor's conviction and sentencing on criminal
charges of Medicare fraud. Dismissing the physician's lament
that the debarment order, from his perspective, was unarguably
punitive, the court determined the sanction to be remedial. See
16
id. at 1542 (stating, inter alia, that "the purpose of . . .
exclusion is to protect the public, a legitimate nonpunitive
goal"). Because the agency "did not assess monetary damages,"
the court ruled that "Halper's analysis . . . does not apply."
Id. Instead, it focused on the totality of the circumstances.
See id.
To be sure, these decisions predate Austin but
because debarment does not come within the Excessive Fines Clause
as we understand it, see Browning-Ferris Indus. v. Kelco
Disposal, Inc., 492 U.S. 257, 264-65 (1989) (holding that the
Excessive Fines Clause is implicated only when a party must make
"a payment to a sovereign as punishment for some offense"),9
nothing in Austin diminishes their vitality. More to the point,
Kurth Ranch, a post-Austin case, makes it pellucid that, when
there is no occasion for an inquiry into financial
proportionality, the classic Halper framework does not fit. See
Kurth Ranch, 114 S. Ct. at 1948.
Two other courts of appeals have arrived at the same
destination by a more roundabout route. In Hudson, 14 F.3d 536,
the Tenth Circuit faced a scenario on all fours with the scenario
presented here. Acting under the identical statute that the FDIC
employed vis-a-vis Stoller, 12 U.S.C. 1818(e), the Comptroller
of the Currency initiated administrative proceedings against
several individuals. He succeeded in securing debarment orders
9Stoller has not argued that the Excessive Fines Clause
applies in this case; and, insofar as we can tell, no such
argument was advanced in either Reed or Manocchio.
17
and agreements for partial restitution. See Hudson, 14 F.3d at
538. The government later pressed criminal charges based on the
same course of conduct. See id. In analyzing the ensuing double
jeopardy challenge, the Tenth Circuit, echoing Halper, stated
"that a sanction should be considered punishment if it is not
solely remedial," but placed a gloss on this statement,
explaining "that a determination that a sanction is at least in
part punishment requires that it must be explained as also
serving as a deterrent or retribution, not merely that it may be
so explained." Id. at 540 (emphasis in original). The court
then pointed out that while 1818(e) may serve to punish
lawbreakers, "it does not follow that all sanctions are
necessarily presumed to be punitive when the [statute's] express
language . . . also allows for remedial sanctions." Id. at 541.
Applying these tenets, the court concluded that the debarment
orders did not comprise punishments and, therefore, rebuffed the
claim of former jeopardy. See id. at 542.
In Bae v. Shalala, 44 F.3d 489 (7th Cir. 1995), the
Seventh Circuit used a similar mode of analysis in turning aside
an ex post facto challenge to a debarment order. The court
assumed the primacy of Halper and started from the premise that,
unless a civil sanction can "fairly be said solely to serve a
remedial purpose," it constitutes punishment. Id. at 493
(quoting Halper, 490 U.S. at 448). But the court added:
A civil sanction that can fairly be said
solely to serve remedial goals will not fail
under ex post facto scrutiny simply because
it is consistent with punitive goals as well.
18
A civil sanction will be deemed to be
punishment in the constitutional sense only
if the sanction "may not fairly be
characterized as remedial, but only as a
deterrent or retribution."
Id. (quoting Halper, 490 U.S. at 449) (emphasis supplied in Bae).
After considering the history and nature of the statute
authorizing the Food and Drug Administration to ban persons from
participating in the pharmaceutical industry, the court concluded
that the order excluding Bae was consistent with a remedial
purpose and, therefore, not punitive. See id. at 494-96.
The difference in approach between the Eleventh
Circuit, on one hand, and the Seventh and Tenth Circuits, on the
other hand, may be more one of emphasis than of substance.10
Certainly, the results reached in these three circuits are
entirely consistent and the courts' approaches put them on nearly
identical courses. The Eleventh Circuit, while eschewing the
Halper dichotomy in debarment situations, heeds Halper's
animating principle. See, e.g., Reed, 937 F.2d at 578
(describing the employment suspension as constituting "the rough
remedial justice permissible as a prophylactic governmental
action") (internal quotation marks and citations omitted). The
other two circuits embrace this same principle whilst departing
from a strict rendition of the Halper dichotomy. See, e.g., Bae,
44 F.3d at 493. Moreover, the Seventh Circuit acknowledges that
10Indeed, both the Seventh and Tenth Circuits have rejected
double jeopardy challenges to debarment orders in the post-Halper
era without discussing the dichotomy. See, e.g., United States
v. Furlett, 974 F.2d 839, 844-45 (7th Cir. 1992); United States
v. Bizzell, 921 F.2d 263, 267 (10th Cir. 1990).
19
hybrid sanctions can pass constitutional muster: a modicum of
punitive effect will not poison a sanction that is essentially
remedial. See id. (conceding that "[t]he punitive effects of the
[debarment] are merely incidental to its overriding purpose to
safeguard the integrity of the generic drug industry while
protecting public health"). This last statement is reminiscent
not only of Reed and Manocchio but also of the position advocated
by the Second Circuit (albeit on different facts). See
Hernandez-Fundora, 58 F.3d at 806 ("[T]he mere fact that a
sanction imposed by prison officials has a punitive component
does not mean that the sanction constitutes ``punishment' for
double jeopardy purposes.").
Despite these similarities in approach, we think it is
prudent to adopt one of the competing methodologies as a guide to
courts and litigants in this circuit. Writing with the added
illumination of Kurth Ranch, we conclude that, to the extent the
circuits' approaches are inconsistent, the directness of the
Eleventh Circuit's analysis in Reed is preferable because it best
effectuates the Supreme Court's admonition that the Halper
dichotomy should not be applied too far afield from its original
context (monetary sanctions designed to make the government whole
for traceable losses). See Kurth Ranch, 114 S. Ct. at 1948. In
addition, the more inclusive totality-of-the-circumstances test
provides a sounder barometer for measuring whether a debarment
order or an analogous non-monetary sanction constitutes
punishment. We so hold.
20
C. The Merits of the Claim.
C. The Merits of the Claim.
We turn next to the question whether the instant
debarment order constitutes punishment within the purview of the
Double Jeopardy Clause. This task does not require us to make a
blanket determination of whether all debarment orders are
remedial as opposed to punitive. Rather, we shine the light of
our gleaned understanding on the particular sanction imposed
under the particular circumstances on the particular defendant in
order to ascertain its character. See Halper, 490 U.S. at 448
(directing "a particularized assessment of the penalty imposed
and the purposes that the penalty may fairly be said to serve").
For this purpose, we assume but do not decide that the
debarment order and the nine "misapplication" counts lodged in
the indictment arise out of the same events and rest upon the
same elements.11
We conduct our inquiry by considering the totality of
the circumstances, including the source of the authority under
which the debarment is imposable, the goals underpinning the
11Under United States v. Dixon, 113 S. Ct. 2849 (1993), a
double jeopardy claim does not take wing simply because the same
conduct underlies two sets of charges. Rather, the defendant
must demonstrate that the charges contain identical elements.
See id. at 2856, 2860. Stoller claims that the requisite
identity exists here between the FDIC's administrative charges
and the first nine counts of the indictment (alleging violations
of 18 U.S.C. 656). The government disagrees. It suggests that
the elements are not congruent because 656 requires proof of a
misapplication of bank funds and willfulness or intent to injure
the bank, whereas 1818(e) contains an element of loss causation
in lieu of the willfulness requirement. Since the debarment
order does not constitute punishment, see text infra, we emulate
the court below and leave this issue unaddressed. See Stoller,
906 F. Supp. at 40 n.2.
21
authorizing statute, the order itself, the purposes it serves,
and the circumstances attendant to its promulgation. See Kurth
Ranch, 114 S. Ct. at 1946-47. In the course of this tamisage, we
give weight to a variety of factors such as the severity of the
civil sanction; its relationship to legitimate, non-punitive
aims; the extent to which the legislature acted to deter
potential wrongdoers, or conversely, to shield the public; and
the nexus (if any) between the civil sanction and the crime that
it allegedly punishes. See id. Because our interest is in
deterrating the overall nature of the sanction, no one factor,
standing alone, is likely to be determinative.
1. The authorizing statute, 12 U.S.C. 1818(e)(1), is
1.
reprinted in the appendix. The statute itself offers relatively
little guidance; it simply permits regulators to seek debarment
orders as long as three conditions are fulfilled. First, the
predicate conduct must consist of (a) violating a law,
regulation, or agency order, (b) engaging in (or condoning) an
unsafe or unsound banking practice, or (c) committing a breach of
fiduciary duty. See id. 1818(e)(1)(A). Second, the conduct
must have (a) caused real or probable loss, (b) actually or
potentially prejudiced depositors' interests, or (c) resulted in
gain to the perpetrator. See id. 1818(e)(1)(B). Third, the
conduct must have (a) involved personal dishonesty, or (b)
"demonstrate[d] willful or continuing disregard . . . for the
safety or soundness of" the financial institution. Id.
1818(e)(1)(C). Whenever these three conditions coalesce, the
22
agency (here, the FDIC) may issue a debarment order. See id.
1818(e)(1). Such an order will apply industry-wide unless
otherwise specified. See id. 1818(e)(7)(A).
These conditions, on their face, are arguably
consistent with punishment and remediation alike. For example,
although the statute's culpability requirement is reminiscent of
the criminal code, such a requirement, in and of itself, does not
mandate a finding of punitive intent. See Hudson, 14 F.3d at
542. By the same token, the statute's evident concern for both
depositors' interests and financial institutions' well-being
strongly suggests a remedial goal, but does not, in and of
itself, mandate a finding of remedial intent. What tends to tip
the balance is that, under 1818(e)(1), the authority to debar
is not tied to a finding that the targeted individual has
committed a crime. Just as the presence of an explicit link
between a civil penalty and the commission of a crime makes it
more likely that the penalty will be deemed punitive for double
jeopardy purposes, see Kurth Ranch, 114 S. Ct. at 1947, so, too,
the fact that a civil penalty can be imposed whether or not the
targeted individual has committed a crime makes it more likely
that the penalty will be deemed remedial, see, e.g., Thomas v.
Commissioner, 62 F.3d 97, 101 (4th Cir. 1995).
In reaching the conclusion that 1818(e)(1), on its
face, displays colors more consistent with the remedial end of
the spectrum, we reject Stoller's argument that Congress's
failure to enact stringent standards circumscribing agency
23
discretion in respect to debarment renders debarment orders
punitive in nature. Simple logic refutes this proposition, and
the case law uniformly contradicts it.12 See, e.g., Bae, 44
F.3d at 496 (characterizing a debarment order as remedial
notwithstanding the authorizing statute's lack of limiting
standards); Hudson, 14 F.3d at 542 (similar).
The legislative history of 1818(e)(1) is helpful.
Fairly read, this history reflects congressional aims far more
compatible with remediation than with punishment. Congress first
enacted the proscription provision in 1966. The report that
accompanied the bill limned the reasons prompting the desired
reforms:
The Federal supervisory agencies in
varying degrees have been seriously
handicapped in their efforts to prevent
irresponsible and undesirable practices by
deficiencies in the statutory remedies.
Experience has often demonstrated that the
remedies now available to the Federal
supervisory agencies are not only too drastic
for use in many cases, but are also too
cumbersome to bring about prompt correction
and promptness is very often vitally
important.
S. Rep. No. 1482, 89th Cong., 2d Sess. 1, 5 (1966), reprinted in
1966 U.S.C.C.A.N. 3532, 3537. When taken in light of the
Committee's manifold concerns about the safety of the nation's
12Stoller's reliance on United States v. Bizzell, 921 F.2d
263 (10th Cir. 1990), is misplaced. There, the district court,
although concluding that the debarment order was not punitive,
rested its decision in part on statutory limitations attendant to
the government's proscriptive powers. See id. at 265. But the
court of appeals did not adopt this rationale, affirming instead
on the general remedial purposes underpinning that statutory
scheme. See id. at 267.
24
financial institutions, see id. at 3536-38, the quoted language
comprises a patent indication that Congress intended debarment
primarily to protect depositors from scurrilous bank officials.
This is a vitally important datum: using a civil sanction to
safeguard the integrity of the banking industry and protect the
interests of depositors fulfills a remedial purpose. See Hudson,
14 F.3d at 541-42.
Nothing in the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 (FIRREA) alters this outlook. Though
FIRREA expanded the scope of possible proscription beyond the
offending official's own bailiwick and for the first time
authorized an industry-wide ban, see 12 U.S.C. 1818(e)(7), it
did not otherwise change the substance of the debarment
provision. The only significant legislative history dealing with
the industry-wide ban addresses the exceptions regulators are
empowered to make and explains them in essentially remedial
terms. See, e.g., H.R. Rep. No. 54(I), 101st Cong., 1st Sess. 1,
468, (1989), reprinted in 1989 U.S.C.C.A.N. 86, 264; H.R. Conf.
Rep. No. 222, 101st Cong., 1st Sess. 393, 440 (1989), reprinted
in 1989 U.S.C.C.A.N. 432, 479. The other changes accomplished by
Title IX of FIRREA are a mixed bag and, in the aggregate, shed
little illumination. The short of it is that the annals of
FIRREA offer no convincing reason to infer that Congress intended
to alter the fundamental (remedial) nature of the debarment
provision.
Stoller resists this conclusion, plucking a single
25
sentence from FIRREA's lengthy legislative history. The House
Report, in its introduction to FIRREA Title IX, states that
"[t]his Title gives the regulators and the Justice Department the
tools which they need . . . to punish culpable individuals, to
turn this situation around, and to prevent these tremendous
losses to the Federal deposit insurance funds from ever again
recurring." H.R. Rep. No. 54(I), supra, 1989 U.S.C.C.A.N. at
262. But this language applies to Title IX as a whole, not to
the debarment provision per se. The immediately preceding
sentence explains that Title IX is intended both to enhance the
FDIC's regulatory powers and to strengthen applicable criminal
justice provisions with a view to "restoring public confidence in
the nation's financial system and serv[ing] to protect the public
interest." Id. Read in tandem, these sentences suggest that
Congress visualized industry-wide debarment as a remedial device,
notwithstanding that the bill included other emendations that
were calculated to increase punishments.
To sum up, the legislative history undergirding the
debarment provision indicates that Congress gave the FDIC removal
power for remedial purposes, and FIRREA does not suggest that
Congress experienced a change of heart.
2. Double jeopardy problems must be examined in their
2.
actual application. See Halper, 490 U.S. at 447. Moving from
the general to the specific, we inspect the circumstances under
which the FDIC sanctioned Stoller. Our assay is hampered because
the regulators' decisions are opaque in certain respects. The
26
ALJ did little more than find that the statutory preconditions to
proscription had been met. Similarly, the Board's initial
decision merely stated that "the serious nature of [Stoller's]
unsafe or unsound conduct and serious breaches of fiduciary duty
merit prohibition from participating in the conduct of the
affairs of any other federally insured depository institution."
In re Stoller, No. 90-115e, at 23-24 (FDIC Feb. 18, 1992) (Board
Dec. I). This explanation seems equally consistent with either
remedial or punitive aims; the Board might have thought Stoller,
as a continuing participant in the banking community, likely to
present an ongoing threat to the public, or it might simply have
thought that he deserved severe punishment.
The Board's second decision furnishes a more
transparent window into its cerebrations, and resolves this
amphiboly. That decision (in which the Board extended Stoller's
exile by prohibiting him from acting as counsel to any financial
institution) persuasively demonstrates that the Board intended
debarment to serve a remedial end. The Board reasoned that the
very nature of a lawyer's relationship with a bank provides a
unique opportunity for double dealing. See In re Stoller, No.
90-115e, at 9 (FDIC Sept. 22, 1992) (Board Dec. II). Hence,
debarment orders should sweep broadly to ensure that rogue
lawyers do not have repeated opportunities to bilk banks. See
id. at 8. Because "an attorney representing a financial
institution, like the institution's directors and officers,
occupies a position of trust and has important fiduciary
27
obligations to the financial institution," id. at 9, the attorney
has "a significant opportunity to harm the institution." Id.
Applying these principles, the Board ordered debarment in the
most wide-ranging terms. It wrote "that Stoller could not be
trusted to put the bank's interests before his own." Id. at 10.
On this basis, the order seems unquestionably to be remedial.
Struggling against this pointed explication of the
Board's rationale, Stoller asseverates that the debarment order
cannot be viewed as remedial because the FDIC did not assess the
danger that continued involvement on his part posed to the
banking system or to depositors. His asseveration lacks force.
In the first place, the FDIC is not required to make
specific findings on the magnitude of a potential threat to the
nation's financial institutions. Halper expressly recognizes
that civil sanctions need not be precisely calibrated in order to
survive scrutiny under the Double Jeopardy Clause as long as they
work "rough remedial justice." 490 U.S. at 446. We think that
this principle is fully transferable to the debarment context.
When, as now, the government demonstrates a pattern of systematic
wrongdoing involving large sums of money, a debarment order may
properly be said to work rough remedial justice without a
detailed prognostication regarding the probable extent of the
wrongdoer's future misconduct, if unchecked. See United States
v. Furlett, 974 F.2d 839, 844 (7th Cir. 1992); Manocchio, 961
F.2d at 1542; see also United States v. Winter, 22 F.3d 15, 17
(1st Cir. 1994) ("It is common wisdom that past is prologue,
28
foreshadowing the future."). Here, the Board, based on Stoller's
pervasive misconduct, could reasonably conclude that he
represented a major threat to the banking industry, and that a
broad debarment order would serve prophylactic purposes.
In the second place, Stoller's claim that the Board did
not consider the risk he presented to the banking industry is
incorrect as a matter of fact. The Board's attention to this
issue is not only evident from the parts of the decisions that we
have cited, but it is also made manifest by the Board's
discussion of a possible reprieve from the industry-wide ban. In
that regard, the Board wrote that the FDIC would have a future
opportunity to determine whether Stoller "could perform work on
behalf of [federally insured depository institutions] without
undue risk to those institutions." Board Dec. II at 11. This
statement not only reflects the Board's worries about imperilling
the public but also highlights the conditional nature of the ban
a fact that itself militates in favor of a finding that the
sanction is remedial as opposed to punitive.13 See Hudson, 14
F.3d at 542.
3. Where, as here, double jeopardy analysis proceeds
3.
under an appraisal of the totality of the circumstances, a civil
sanction need not be solely remedial to pass constitutional
muster. In other words, the fact that something akin to
13We do not mean to suggest that a permanent ban would
necessarily be punitive. See Bae, 44 F.3d at 495 (explaining
that "the duration or severity of an employment restriction will
not mark it as punishment where it is intended to further a
legitimate governmental purpose").
29
punishment occurs along with, and incidental to, a sanction's
overriding remedial purpose will not transform a permissible
civil penalty into a prohibited multiple punishment. See
Hernandez-Fundora, 58 F.3d at 806; Bae, 44 F.3d at 493. Having
examined 1818(e)(1), the applicable legislative history, the
circumstances attendant to Stoller's duplicity, and the rationale
underlying the Board's issuance of the specific debarment order
at issue here, we discern a single unifying thread: protection
of the integrity of the nation's financial institutions. This
comports with the root purpose of debarment: to purge sensitive
industries of corruption and thereby protect the public. This
purpose, evident here, is essentially remedial in nature.
We need go no further. Although the durationally
indefinite order of proscription directed against Stoller is
harsh, we do not believe that it is disproportionate to the
remedial goals of 1818(e)(1). Nor is the debarment order out
of proportion to Stoller's wrongdoing. This is a salient
consideration because an individual's misconduct frequently
informs the need for remediation. See Hudson, 14 F.3d at 542;
Furlett, 974 F.2d at 844. Here, Stoller caused the Bank to
suffer extensive losses, and did so by the most devious means
playing shell games with real estate trusts, abusing a position
of trust, and duping others by concealing his interests in
financial transactions. In our judgment, the Board's decision to
ban Stoller indefinitely from all association with the banking
industry "reasonably can be viewed as a remedial measure
30
commensurate with his wrongdoing." Furlett, 974 F.2d at 844.
Put another way, industry-wide debarment, in the circumstances of
this case, produces rough remedial justice.
IV. CONCLUSION
IV. CONCLUSION
When the powers of government are arrayed against an
individual, courts must be vigilant to ensure that the individual
is not punished twice for the same offense through an artifice in
which one punishment masquerades as a civil sanction. Yet the
fear of potential abuse should not be allowed to sweep away
common sense. Regulators who act principally to safeguard the
integrity of the industries that they oversee or to shield the
public from the machinations of unscrupulous persons are
representatives of the sovereign but they are not purveyors of
punishment in a constitutionally relevant sense. In the end,
then, courts must distinguish carefully between those sanctions
that constitute impermissible exercises of the government's power
to punish and those that constitute permissible exercises of the
government's remedial authority (even if effectuating a specific
remedy sometimes carries with it an unavoidable component of
deterrence or retribution).
Taking into account the totality of the circumstances,
we hold that the debarment order imposed by the FDIC is
predominantly remedial in nature. Because it does not constitute
a punishment under appropriate double jeopardy analysis, the
district court did not err in denying the motion to dismiss
31
various counts contained in the indictment.14
Affirmed.
Affirmed.
14We note in passing that we would reach an identical result
if we evaluated the debarment order under the Hudson/Bae
variation on the Halper theme instead of under the totality of
the circumstances.
32
STATUTORY APPENDIX
STATUTORY APPENDIX
I. Debarment.
I. Debarment.
(1) Authority to issue order.--Whenever the appropriate
Federal banking agency determines that--
(A) any institution-affiliated party has, directly
or indirectly--
(i) violated--
(I) any law or regulation;
(II) any cease-and-desist order which
has become final;
(III) any condition imposed in writing
by the appropriate Federal banking agency in
connection with the grant of any application
or other request by such depository
institution; or
(IV) any written agreement between such
depository institution and such agency;
(ii) engaged or participated in any unsafe or
unsound practice in connection with any insured
depository institution or business institution; or
(iii) committed or engaged in any act,
omission, or practice which constitutes a breach
of such party's fiduciary duty;
(B) by reason of the violation, practice, or
breach described in any clause of subparagraph (A)--
(i) such insured depository institution or
business institution has suffered or will probably
suffer financial loss or other damage;
(ii) the interests of the insured depository
institution's depositors have been or could be
prejudiced; or
(iii) such party has received financial gain
or other benefit by reason of such violation,
practice, or breach; and
(C) such violation, practice, or breach--
(i) involves personal dishonesty on the part
of such party; or
(ii) demonstrates willful or continuing
disregard by such party for the safety or
soundness of such insured depository institution
or business institution,
the agency may serve upon such party a written notice of the
agency's intention to remove such party from office or to
prohibit any further participation by such party, in any manner,
in the conduct of the affairs of any insured depository
institution.
12 U.S.C. 1818(e)(1) (1994).
33
II. Industry-wide Prohibition.
II. Industry-wide Prohibition.
(A) In general.--Except as provided in subparagraph
(B), any person who, pursuant to an order issued under this
subsection . . . has been removed or suspended from office in an
insured depository institution or prohibited from participating
in the conduct of the affairs of an insured depository
institution may not, while such order is in effect, continue or
commence to hold any office in, or participate in any manner in
the conduct of the affairs of . . . any insured depository
institution . . . .
(B) Exception if agency provides written consent.--If,
on or after the date an order is issued under this subsection
which removes or suspends from office any institution-affiliated
party or prohibits such party from participating in the conduct
of the affairs of an insured depository institution, such party
receives the written consent of [the relevant federal agencies],
subparagraph (A) shall, to the extent of such consent, cease to
apply to such party with respect to the institution described in
each written consent.
12 U.S.C. 1818(e)(7) (1994).
III. Offenses Charged in the Indictment.
III. Offenses Charged in the Indictment.
The superseding indictment handed up on January 4,
1995, charged Stoller with violating various criminal statutes.
Those statutes provide in pertinent part:
Whoever, being an officer, director, agent or
employee of . . . any . . . national bank or insured
bank . . . embezzles, abstracts, purloins or willfully
misapplies any of the moneys, funds or credits of such
bank . . . shall be [punished as provided by law] . . .
.
18 U.S.C. 656 (1988).
Whoever . . . as an officer, director, employee,
agent, or attorney of a financial institution,
corruptly solicits or demands for the benefit of any
person, or corruptly accepts or agrees to accept,
anything of value from any person, intending to be
influenced or rewarded in connection with any business
or transaction of such institution . . . shall be
[punished as provided by law] . . . .
18 U.S.C. 215(a) (1988).
Whoever makes any false entry in any book, report,
34
or statement of [a federally insured] bank with intent
to injure or defraud such bank, or any other company,
body politic or corporate, or any individual person, or
to deceive any officer of such bank, or the . . .
Federal Deposit Insurance Corporation . . . [s]hall be
[punished as provided by law].
18 U.S.C. 1005 (1988).
(a) Whoever commits an offense against
the United States or aids, abets, counsels,
commands, induces or procures its commission,
is punishable as a principal.
(b) Whoever willfully causes an act to
be done which if directly performed by him or
another would be an offense against the
United States, is punishable as a principal.
18 U.S.C. 2 (1988).
35