UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 95-40884

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

BENNY L. RUSK,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Texas

September 23, 1996

Before HIGGINBOTHAM, WIENER, and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

I. FACTS AND PROCEEDINGS BELOW

From 1952 to 1989, Benny Rusk worked at First State Bank of

Liberty, Texas. By 1988, Rusk had become president of the bank.

In addition, Rusk owned a majority of the bank's stock and was one

of its directors.

On October 14, 1988, the FDIC conducted an examination of the

bank. Bank examiners discovered numerous violations of banking

regulations. John Schmalzer, the examiner-in-charge, reported that
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loans ostensibly made to other individuals were actually for Rusk's

benefit. In addition, Rusk allegedly received $214,000 that had

been expensed by the bank as legal and professional fees and

$175,000 from the bank's credit life rebate account. In December

1988, Schmalzer recommended to the FDIC Regional Director that Rusk

be suspended from participating in the bank's affairs and be

ordered to cease and desist from using bank funds to service his

own personal loans.

The FDIC subsequently determined to initiate debarment

proceedings against Rusk pursuant to 12 U.S.C. § 1818(e). The FDIC

informed the bank of its intent and, on April 27, 1989, served Rusk

with the Notice of Intention to Remove from Office and to Prohibit

from Participation. Prior to the filing of the Notice, Rusk

returned $389,769 to the bank as restitution for his

misappropriation of the bank's funds from the account for legal and

professional fees and from the credit life rebate account.

On July 27, 1989, Rusk entered into a Stipulation and Consent

to an Issuance of an Order of Removal. Pursuant to the

Stipulation, Rusk consented to the entry of an order prohibiting

him from participating in the bank's affairs and, further, from

participating in the affairs of any bank insured by the FDIC

without the FDIC's prior written consent. On January 26, 1990, the

FDIC issued an order to that effect.

On March 11, 1992, Rusk was charged in a ten-count indictment

arising from the foregoing activities. The indictment charges Rusk

with conspiracy to make false entries; four counts of false
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entries; three counts of misapplication of bank funds; and two

counts of false statements to the IRS. Rusk moved to dismiss the

indictment, alleging that the prior administrative proceedings

constitute punishment for purposes of double jeopardy and therefore

bar the instant criminal prosecution. The district court denied

the motion. Rusk now appeals that denial. The district court

stayed the criminal proceedings pending this appeal.

II. ANALYSIS

Rusk argues that the criminal indictment constitutes multiple

punishment for the same offense adjudicated in the earlier FDIC

administrative proceedings. Relying on United States v. Halper,

490 U.S. 435 (1989), Rusk contends that the sanctions imposed by

the FDIC were not solely remedial and, therefore, qualify as

punishment under Supreme Court precedent. Rusk points to three

sanctions allegedly imposed by the FDIC: (1) the $389,769

restitution payment; (2) the debarment order; and (3) the drop in

the value of Rusk's bank stock allegedly caused by the debarment

order.

The restitution payment does not constitute punishment

because it is purely remedial. The restitution payment corresponds

exactly to the amount Rusk embezzled from the bank's accounts.

Stated another way, the payment simply returns to the bank what he

stole from it; it does not serve a punitive purpose.

This circuit has yet to address whether a debarment order

issued in an administrative proceeding constitutes punishment for
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purposes of double jeopardy. Other circuits that have addressed

the issue in related contexts have uniformly held that such orders

do not constitute punishment. See DiCola v. Food & Drug Admin., 77

F.3d 504, 507 (D.C. Cir. 1996) (holding debarment under 21 U.S.C.

§ 335a(a) did not constitute punishment for purposes of double

jeopardy); Bae v. Shalala, 44 F.3d 489, 496 (7th Cir. 1995) (same);

United States v. Furlett, 974 F.2d 839, 844 (7th Cir. 1992)

(holding CFTC debarment did not constitute punishment); United

States v. Bizzell, 921 F.2d 263, 267 (10th Cir. 1990) (holding 3-

year HUD debarment did not constitute punishment). Furthermore,

those circuits to consider debarment orders issued under the same

statutory authority as here, 12 U.S.C. § 1818, have held those

orders do not constitute punishment. United States v. Stoller, 78

F.3d 710, 724 (1st Cir. 1996); United States v. Hudson, 14 F.3d

536, 542 (10th Cir. 1994).

As those courts have explained, debarment orders do not serve

a punitive purpose but rather the remedial goal of protecting the

banking industry:

[T]he OCC's use of debarment as a means of protecting the

integrity of the banking system and the interests of the

depositors is a legitimate remedial purpose that need not

necessarily be defined as also serving as deterrence or

retribution.

Hudson, 14 F.3d at 541-42. Similarly, after examining § 1818's

text and legislative history, as well as the particular nature of

the debarment there at issue, Judge Selya concluded that "the root

purpose of debarment . . . [is] to purge sensitive industries of

corruption and thereby protect the public. This purpose, evident
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here, is essentially remedial in nature." Stoller, 78 F.3d at 724.

We agree that the debarment order was remedial, not punitive.

Finally, Rusk contends that the loss in stock value was

attributable to the FDIC's debarment order and, therefore,

constitutes punishment by the FDIC. This argument is without

merit.

Even accepting that the loss in stock value was attributable

to the FDIC debarment order--itself a debatable proposition--the

loss of stock is a collateral consequence of the debarment order.

The FDIC order did not mandate that Rusk forfeit his stock or that

the stock go down in value. Rather, the loss in stock value was

the market's reaction to Rusk's departure from the bank. Rusk

cites no authority that a collateral consequence of a sanction is

part of the sanction itself.

In short, the FDIC's sanctions did not punish Rusk but rather

served remedial purposes. Consequently, the criminal prosecution

does not constitute an attempt to impose multiple punishments for

the same offense. 

The district court's denial of Rusk's motion is therefore

AFFIRMED.