U.S. v. Hudson

Decision Date24 January 1994
Docket NumberNos. 93-6117,93-6123 and 93-6125,s. 93-6117
Citation14 F.3d 536
PartiesUNITED STATES of America, Plaintiff-Appellee, v. John C. HUDSON, Larry Baresel, and Jack Butler Rackley, Defendants-Appellants.
CourtU.S. Court of Appeals — Tenth Circuit

B.J. Rothbaum, Jr. of Linn & Helms, Oklahoma City, OK (Drew Neville of Linn & Helms, Oklahoma City, OK, with him on the briefs, for defendant-appellant John C. Hudson; Lynn A. Pringle and James R. Martin, Jr. of Pringle & Pringle, Oklahoma City, OK, and James A. Rolfe, Dallas, TX, on the briefs, for defendant-appellant Larry Baresel; and C. Merle Gile, Oklahoma City, OK, on the briefs, for defendant-appellant Jack Butler Rackley, for defendants-appellants.

Timothy W. Ogilvie, Asst. U.S. Atty. (John E. Green, U.S. Atty. and Barbara E. Poarch, Asst. U.S. Atty., with him, on the brief), Oklahoma City, OK, for plaintiff-appellee.

Before KELLY, SETH, and GOODWIN *, Circuit Judges.

SETH, Circuit Judge.

Appellants John Hudson, Larry Baresel and Jack Rackley were indicted in August 1992 for criminal law violations of 18 U.S.C. Secs. 2, 371, 656 and 1005 because of their alleged mismanagement and illegal operation of several banks. These violations were based on the same lending transactions which were the subject of prior administrative sanctions imposed against the Appellants by the Comptroller of the Currency ("OCC") for violations of various federal banking laws.

Each Appellant moved to dismiss the indictment on double jeopardy grounds. The United States District Court for the Western District of Oklahoma consolidated and denied all three motions, and this appeal followed.

In early 1989 the OCC issued a "Notice of Assessment of a Civil Money Penalty" against the Appellants assessing civil penalties pursuant to 12 U.S.C. Secs. 93(b) and 504 for alleged violations of 12 U.S.C. Secs. 84 and 375b and 12 C.F.R. Secs. 31.2(b) and 215.4(b). The OCC maintained that Appellants' violations caused approximately $900,000.00 in "losses". Appellant Hudson was ordered to pay $100,000.00, and Appellants Rackley and Baresel were ordered to pay $50,000.00 each. Payments were to be made to the Treasurer of the United States. Later in 1989 the OCC issued a "Notice of Intent to Prohibit Further Participation" ("Prohibition Order") to the Appellants, which sought to prevent the Appellants "from further participation, in any manner, in the conduct of the affairs of any insured depository institution." In essence, the OCC sought to prohibit Appellants from all banking activities.

As a result of the then pending OCC administrative proceedings, the Appellants entered into a Stipulation and Consent Order ("Consent Order") (October 1989) whereby Appellant Hudson consented to pay $16,500.00 and Appellants Rackley and Baresel consented to pay $15,000.00 each. The Appellants also agreed not to participate in most, if not all, banking activities unless they received prior written authorization from the OCC and the appropriate federal regulatory agency. In addition, the Consent Order at the end included a provision ("Waiver Provision") stating:

"Respondent understands that nothing herein shall preclude any proceedings brought by the Comptroller to enforce the terms of this Stipulation and Consent, and that nothing herein constitutes, nor shall Respondent contend that it constitutes, a waiver of any right, power, or authority of any other representatives of the United States, or agencies thereof, to bring other actions deemed appropriate."

The district court concluded that Appellants made a knowing, voluntary and intelligent waiver of their double jeopardy claim by signing the Consent Order. The district court also held, "upon review of the record", that the agreed upon fines and nonparticipation sanctions were "solely" remedial. Thus the conclusion that Appellants' double jeopardy claims must fail. By basing its decision on the foregoing, the court stated that it did not consider whether the "conduct" underlying the OCC sanctions and the indictment was the same.

The first issue to be considered is whether the Waiver Provision of the Consent Order effectively cut off Appellants' rights to raise the double jeopardy defense. We review the decision of the district court on this issue de novo. Larson v. Tansy, 911 F.2d 392 (10th Cir.). To be valid waivers "not only must be voluntary but must be knowing, intelligent acts done with sufficient awareness of the relevant circumstances and likely consequences." Brady v. United States, 397 U.S. 742, 748, 90 S.Ct. 1463, 1469, 25 L.Ed.2d 747. Moreover, because a fundamental constitutional right is at issue, we must subject the purported waiver to stringent scrutiny and "indulge every reasonable presumption against the loss of constitutional rights." United States v. Geittmann, 733 F.2d 1419, 1423 (10th Cir.) (quoting Illinois v. Allen, 397 U.S. 337, 343, 90 S.Ct. 1057, 1060, 25 L.Ed.2d 353).

The pertinent language of the Waiver Provision provides that "nothing herein constitutes, nor shall Respondent contend that it constitutes, a waiver of any right, power, or authority of any other representatives of the United States ... to bring other actions...." This language states that the Government does not waive its rights to institute further actions against Appellants. In fact, the Government did precisely this by filing the indictment. Contrary to the Government's position, however, the provision's language cannot reasonably be interpreted as a waiver by Appellants of their constitutional rights to raise valid defenses to the indictment. If it was the Government's intent to have Appellants waive certain rights, the Government would have phrased the Waiver Provision in terms which clearly stated that Appellants were abandoning those rights so that they could have made a voluntary, intelligent and knowing waiver. We note in passing that Article III of the Consent Order explicitly enumerated various rights and interests that were expressly waived by Appellants and that this would have been the appropriate place to create a waiver of Appellants' double jeopardy rights.

The Government would have us rely on United States v. Marcus Schloss & Co., 724 F.Supp. 1123 (S.D.N.Y.), in which the court held:

"[T]he defendant in an SEC civil proceeding who, with knowledge of a pending criminal inquiry, enters into a consent order explicitly recognizing the absence of any bar to criminal proceedings arising out of the same conduct, cannot subsequently advance that civil disposition, even accompanied by monetary sanctions, as the basis for a claim of double jeopardy."

Id. at 1127 (emphasis added). The problem with the Government's reliance on Marcus Schloss is that there is no evidence in the record before us that Appellants had knowledge of any pending criminal proceedings or inquiries. Based on the record, we hold that the Waiver Provision's protection of the Government's right and authority to bring further actions does not operate as a valid waiver by Appellants of the double jeopardy defense. The most that can be said in view of the introductory words "Respondents understand" is that they could be sued.

The remaining issue on appeal is whether the district court correctly held that Appellants were not entitled to double jeopardy protection because both the nonparticipation and the money sanctions were not punishment. The standard of review of this issue is also de novo. United States v. Sasser, 974 F.2d 1544, 1549 (10th Cir.).

In addressing the parties' arguments relating to the punitive nature of the civil sanctions imposed, the district court correctly relied on the Supreme Court's decision in United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487. As in Halper, we are concerned with the Double Jeopardy Clause's protection against multiple punishments for the same offense. Because it is indisputable that the pending criminal indictment seeks to punish the Appellants, we must determine whether the sanctions imposed pursuant to the Consent Order were "punishment" for purposes of double jeopardy analysis. The Court in Halper stated:

"that in determining whether a particular civil sanction constitutes criminal punishment, it is the purposes actually served by the sanction in question, not the underlying nature of the proceeding giving rise to the sanction, that must be evaluated."

Halper, 490 U.S. at 447 n. 7, 109 S.Ct. at 1901 n. 7.

"To that end, the determination whether a given civil sanction constitutes punishment in the relevant sense requires a particularized assessment of the penalty imposed and the purposes that the penalty may fairly be said to serve....

"... We have recognized in other contexts that punishment serves the twin aims of retribution and deterrence.... [I]t follows 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 to understand the term.... We therefore hold 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."

Id. at 448-49, 109 S.Ct. at 1902 (citations omitted).

Appellants contend that the above quoted language means that unless a sanction is "solely" remedial, i.e., not serving deterrent or retributive ends, it is punishment. This position is confirmed by the recent Supreme Court decision in Austin v. United States, --- U.S. ----, 113 S.Ct. 2801, 125 L.Ed.2d 488.

In Austin, the Court addressed whether a civil forfeiture was punishment for purposes of the Eighth Amendment's Excessive Fines Clause. The Court noted that "sanctions frequently serve more than one purpose." Id. at ----, 113 S.Ct. at 2802. However, even if a sanction is remedial,...

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    ...safety purpose). Other losses of privileges have similarly been recognized as regulatory rather than punitive. United States v. Hudson, 14 F.3d 536, 541-542 (10th Cir.1994) (revocable ban from participation in banking activities); United States v. Bizzell, 921 F.2d 263, 267 (10th Cir.1990) ......
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1 books & journal articles
  • Double jeopardy protection from civil sanctions after Hudson v. United States.
    • United States
    • Journal of Criminal Law and Criminology Vol. 89 No. 3, March 1999
    • 22 mars 1999
    ...879 F. Supp. 1113 (W.D. Okl. 1994), rev'd, 92 F.3d 1026 (10th Cir. 1996), aff'd, 118 S. Ct. 488 (1997). (149) See United States v. Hudson, 14 F. 3d 536, 538 (10th Cir. (150) See id. The U.S. District Court of Western Oklahoma filed an order denying the motions on March 25, 1993. See Brief f......

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