U.S. v. Andrews

• Decision Date: 26 June 1998
• Docket Number: Nos. 97-3035,97-3036,s. 97-3035
• Parties: , Fed. Sec. L. Rep. P 90,232 UNITED STATES of America, Appellee, v. Arthur R. ANDREWS, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 933

146 F.3d 933

330 U.S.App.D.C. 420, Fed. Sec. L. Rep. P 90,232

UNITED STATES of America, Appellee, v. Arthur R. ANDREWS, Appellant.

Nos. 97-3035, 97-3036.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 23, 1997.

Decided June 26, 1998.

Appeals from the United States District Court for the District of Columbia (Nos. 96cr00139-01, 96cr00139-02).

L. Barrett Boss, Assistant Federal Public Defender, argued the cause for appellants, with whom A.J. Kramer, Federal Public Defender, and Joseph R. Conte, appointed by the court, were on the briefs.

Barbara J. Valliere, Assistant U.S. Attorney, argued the cause for appellee, with whom Mary Lou Leary, U.S. Attorney, John R. Fisher and Harry R. Benner, Assistant U.S. Attorneys, were on the brief. Elizabeth Trosman, Assistant U.S. Attorney, entered an appearance.

Before: WILLIAMS, ROGERS and GARLAND, Circuit Judges.

GARLAND, Circuit Judge:

Appellants are the chief executive officer and president of a corporation against which the Securities and Exchange Commission (SEC) secured a civil monetary penalty in 1995. In 1996, a grand jury indicted appellants for essentially the same conduct. Appellants contend that the SEC penalty constitutes a punishment that bars their subsequent criminal prosecution under the Double Jeopardy Clause of the Fifth Amendment. We disagree. Whether or not such a penalty would implicate the Clause if imposed on appellants, we hold that the penalty imposed on the corporation constitutes neither a punishment of appellants, nor a sufficiently choate "attempt to punish" the appellants, to implicate their constitutional rights. Accordingly, we do not reach the question whether the SEC penalty would constitute a criminal punishment for double jeopardy purposes under the test the Supreme Court recently announced in Hudson v. United States, --- U.S. ----, 118 S.Ct. 488, 139 L.Ed.2d 450 (1997), which replaced the test previously employed in United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989).

I

Appellant Arthur Andrews is the chief executive officer, and appellant Thomas Green is the president, of Fulcrum Holding Co., Inc., a District of Columbia corporation. Andrews is Fulcrum's sole shareholder. According to the SEC, in 1994 Fulcrum offered prospective investors an opportunity to purchase "prime bank bills of exchange," which it promised would yield a return of at least 50% by the end of one year. One such investor was Bayport Holdings, Ltd., which in May 1994 wired Fulcrum $1.5 million for the purchase of prime bank bills. Instead of using the money to buy an investment for Bayport, however, the SEC contends that Fulcrum and its principals used the money for a variety of unrelated purposes, including the purchase of personal automobiles and jewelry, and the payment of personal hotel bills. Moreover, Fulcrum allegedly sent Bayport back some of Bayport's own money, misrepresenting it as profit on the trading of prime bank bills, in order to lull Bayport into believing that Fulcrum had made the promised investment.

On October 31, 1994, the SEC filed a civil complaint against Fulcrum and Andrews, charging that the prime bank bills scheme violated the antifraud provisions of the securities laws. The complaint did not name appellant Green. It sought injunctive relief, disgorgement of the proceeds of the illegal conduct, and civil penalties, against both Fulcrum and Andrews. ¹

On February 10, 1995, the SEC moved for summary judgment solely against Fulcrum. The district court granted the motion, and ordered Fulcrum to pay Bayport disgorgement in the amount of $1.5 million and to pay the SEC a civil penalty in the amount of $500,000. In response to Fulcrum's representation that it had filed for protection under the Bankruptcy Code, the district court suspended Fulcrum's obligation to pay the disgorgement and penalty amounts pending further order.

On June 1, 1995, the SEC moved for partial summary judgment against Andrews, requesting injunctive relief and disgorgement, but expressly not seeking civil penalties from him. See Mem. in Supp. of Mot. for Partial Summ. J. at 1 n.1, 12. The district court's final judgment, entered on July 31, 1995, granted the SEC's request for injunctive relief, and held Fulcrum and Andrews jointly and severally liable for the payment of $1.5 million in disgorgement to Bayport (plus pre- and post-judgment interest). The court noted that the SEC had filed a status report indicating it no longer was seeking civil penalties from Andrews. Accordingly, the court ordered Fulcrum alone to pay the $500,000 civil penalty to the SEC.

On April 30, 1996, a grand jury in the District of Columbia indicted appellants for essentially the same conduct at issue in the civil suit, charging criminal violations of the federal mail fraud, wire fraud, and money laundering statutes. ² Appellants moved to dismiss the indictment on double jeopardy grounds, arguing that the $500,000 penalty imposed on Fulcrum constituted prior punishment under the test employed in United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989); that the punishment was imposed for the same offense as that charged in the indictment under the test employed in Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932); and that the punishment imposed on Fulcrum was effectively a punishment of its officers, Andrews and Green.

The district court denied appellants' motion. The court did not consider whether the civil penalty constituted punishment under Halper, or whether the offenses were the same under Blockburger. Instead, the court held the Double Jeopardy Clause inapplicable because "[t]he prohibition against multiple punishments does not attach until a punishment is imposed," and because the judge in the SEC action had imposed the civil penalty only against Fulcrum and not against Andrews or Green. Andrews and Green immediately appealed the denial of their motion to dismiss.

II

We must first consider whether we have jurisdiction to hear this interlocutory appeal. Under the final-judgment rule, we ordinarily do not have jurisdiction to hear a defendant's appeal in a criminal case prior to conviction and sentencing. See generally 28 U.S.C. § 1291. In Abney v. United States, however, the Supreme Court held that a pretrial denial of a motion to dismiss an indictment on double jeopardy grounds was immediately appealable under the " 'collateral order' exception to the final-judgment rule." 431 U.S. 651, 657, 659-62, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977). Noting that the Double Jeopardy Clause "is a guarantee against being twice put to trial for the same offense," the Court held that this aspect "of the guarantee's protections would be lost if the accused were forced to 'run the gauntlet' a second time before an appeal could be taken." Id. at 661, 97 S.Ct. 2034.

Abney involved the Double Jeopardy Clause's protection against successive prosecution. But the Supreme Court has held the Clause to have two prongs: it protects not only against "successive prosecution," but also against "successive punishment." Witte v. United States, 515 U.S. 389, 395-96, 115 S.Ct. 2199, 132 L.Ed.2d 351 (1995). See also United States v. Ursery, 518 U.S. 267, 116 S.Ct. 2135, 2139, 135 L.Ed.2d 549 (1996) (quoting United States v. Dixon, 509 U.S. 688, 696, 113 S.Ct. 2849, 125 L.Ed.2d 556 (1993)). ³ Appellants here do not allege a violation of the successive prosecution prong; instead they charge that the government is seeking to impose a second punishment.

It might be argued that a claim brought under the successive punishment prong does not require an interlocutory appeal for its vindication. If appellants ultimately are acquitted, they will not have been punished twice; if they are convicted, a court can vacate the second punishment on appeal. Abney itself seemed to give support to such an argument, for it noted that the protection against double punishments, unlike the guarantee against being twice put to trial, "can be fully vindicated on an appeal following final judgment." 431 U.S. at 660, 97 S.Ct. 2034.

This line of argument, however, was foreclosed by the Court's subsequent opinion in Witte v. United States, 515 U.S. 389, 115 S.Ct. 2199, 132 L.Ed.2d 351 (1995). There, the Court permitted an interlocutory appeal alleging that a pending prosecution on cocaine charges was barred by the successive punishment prong because the conduct at issue had already been taken into account in defendant's sentencing for a prior marijuana conviction. The Court held that the defendant's successive punishment claim was ripe for review, although he had not yet been convicted or sentenced on the cocaine charges, because the Clause protected not just against "more than one punishment for the same offense" but also against "an attempt to secure that punishment in more than one trial." 515 U.S. at 397, 115 S.Ct. 2199 (emphasis added). Accordingly, multiple punishment claims, like multiple prosecution claims, are appropriate subjects for interlocutory appeal. See United States v. Perez-Herrera, 86 F.3d 161, 163 (10th Cir.1996); United States v. Baird, 63 F.3d 1213, 1215 & n. 4 (3d Cir.1995); United States v. Woods, 949 F.2d 175, 177 n. 1 (5th Cir.1991). ⁴

But that does not end the matter. A defendant cannot obtain interlocutory review of a motion to dismiss an indictment simply by characterizing his claim as one involving double jeopardy. If that were the rule, defendants could disrupt their trials at will, pending the resolution of appeals. Instead, the Supreme Court held in Richardson v. United States that a claim of double jeopardy must be at least "colorable" to confer interlocutory jurisdiction on an appellate court. 468 U.S. 317, 322, 104 S.Ct. 3081, 82 L.Ed.2d 242 (1984). The standard is a lenient one. Indeed, the Court made clear just how lenient the standard was in Abney itself where, although it found...