2013 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-4-2013

USA v. Vincent Fumo

Precedential or Non-Precedential: Non-Precedential

Docket No. 11-4499

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Recommended Citation

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

Nos. 11-4499 and 11-4621

_______________

UNITED STATES OF AMERICA,

Appellant in No. 11-4499

v.

VINCENT J. FUMO,

Appellant in No. 11-4621

________________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Criminal No. 2-06-cr-00319-003)

District Judge: Honorable Ronald L. Buckwalter

_______________

Argued December 14, 2012

BEFORE: GREENAWAY, JR., GREENBERG, and COWEN, Circuit Judges

(Filed: February 4, 2013)

John J. Pease, III, Esq.

Robert A. Zauzmer, Esq. (Argued)

Office of United States Attorney

615 Chestnut Street

Suite 1250

Philadelphia, PA 19106

Counsel for Appellant in No. 11-4499

and Appellee in No. 11-4621
2

Peter Goldberger, Esq. (Argued)

50 Rittenhouse Place

Ardmore, PA 19003

Counsel for Appellant in No. 11-4621

and Appellee in No. 11-4499

_______________

OPINION

_______________

COWEN, Circuit Judge.

The government and Defendant Vincent J. Fumo challenge, on different grounds,

the restitution component of a criminal sentence entered by the United States District 

Court for the Eastern District of Pennsylvania. This sentence will be affirmed in part and 

vacated in part. We will affirm the sentence insofar as it increased the restitution amounts

that Fumo was required to pay to his victims. We will vacate the sentence insofar as it 

ordered Fumo to pay only half of the restitution owed to Citizens Alliance for Better 

Neighborhoods (―Citizens Alliance‖). We will also vacate the sentence as to the 

calculation of prejudgment interest. Finally, we will remand this matter to the District 

Court with specific instructions to determine Fumo‘s share of the Citizens Alliance 

restitution on the basis of the applicable statutory factors as well as the actual evidence in 

this case and to make a proper prejudgment interest calculation. 

I.

Fumo, a former Pennsylvania State Senator, was convicted on 137 counts of fraud, 

tax evasion, and obstruction of justice. Specifically, he was found guilty of defrauding 

the Pennsylvania State Senate, Citizens Alliance (a non-profit charitable organization that 
3

he founded), and the Independence Seaport Museum (―ISM‖). The District Court 

sentenced him to a term of imprisonment of 55 months, 3 years of supervised release, a 

$411,000 fine, and a special assessment of $13,700. Furthermore, he was ordered to pay 

restitution in the total amount of $2,340,839.46. Based on its loss calculations under the 

Sentencing Guidelines (as adjusted for prejudgment interest as well as for sums already 

recovered), the District Court specifically ordered Fumo to pay restitution to his three 

victims in the following amounts: (1) $1,413,819.05 to the State Senate; (2) $792,802.42 

to Citizens Alliance; and (3) $134,217.99 to ISM. Ruth Arnao, a former Fumo aide and 

director of Citizens Alliance, likewise was convicted on 45 counts of fraud, tax evasion, 

and obstruction of justice, and she was sentenced to serve a year and a day in prison and 3 

years of supervised release. In addition to a $45,000 fine and a $4,500 special 

assessment, the District Court ordered her to pay $792,802.42 in restitution to Citizens 

Alliance. Both Fumo and Arnao were required to pay the Citizens Alliance restitution 

―jointly and severally.‖ United States v. Fumo, 655 F.3d 288, 302 (3d Cir. 2011).

The government and Fumo appealed, and they both raised a multitude of 

arguments for our consideration. We ultimately disposed of this first round of appeals in 

a lengthy opinion dated August 23, 2011 (and amended on September 15, 2011). We 

began by observing that, ―[f]or the following reasons, we will affirm Fumo‘s conviction, 

vacate the sentences of Fumo and Arnao, and remand both for resentencing before the 

District Court.‖ Id. at 294. We similarly concluded the entire opinion with the following 

sentence: ―For the foregoing reasons, we affirm Fumo‘s conviction, vacate the sentences 
4

of both Fumo and Arnao, and remand for further proceedings not inconsistent with this 

opinion.‖ Id. at 324. 

The government specifically disputed ―a number of the calculations that went into 

the District Court‘s determination of the loss attributable to Fumo‘s fraud.‖ Id. at 309. 

―Ultimately, the District Court‘s decisions resulted in a loss calculation for Fumo which 

fell just short of $2.5 million, the threshold for increasing the offense level‖ under the 

Guidelines. Id. We determined that the District Court committed reversible error with 

respect to some of these calculations. In turn, Fumo challenged ―one aspect of his 

sentence, raising two arguments for why prejudgment interest on the restitution awarded

was an abuse of discretion.‖ Id. at 319. Rejecting both of these arguments, we concluded 

our ―Prejudgment interest on the order of restitution‖ discussion by stating that ―[w]e 

will therefore affirm the order of restitution, including prejudgment interest.‖ Id. at 319, 

322. 

On remand, the government asked the District Court to increase the restitution 

amounts ―to more accurately reflect the loss calculation as recognized by the Third 

Circuit.‖ (Gov‘t‘s App. at 199.) However, Fumo argued that the restitution issue was not 

even before the District Court because ―the government did not raise the issue on appeal‖ 

and ―the Third Circuit affirmed the restitution order, including the award of pre-judgment 

interest.‖ (Id.) The District Court ultimately considered but rejected these two arguments 

as ―not persuasive.‖ (Id.) It then determined that ―the total losses occasioned by Mr. 

Fumo‘s fraud with pre-judgment interest added are as follows: Fraud on the Senate, 
5

2,517,274 dollars; fraud on Citizens Alliance, 1,566,528 dollars; fraud on the 

Independence Seaport Museum, [135,010] dollars.‖ (Id. at 200-01.) These amounts 

yielded a total ―figure of 4,218,812 dollars.‖ (Id.) Over the prosecutor‘s objection, the 

District Court determined that Fumo was liable for only half of the Citizens Alliance

restitution—or $783,264. (Id. at 201.) Ultimately, ―the total figure of restitution will be 

in the amount of 3,435,548 dollars.‖ (Id. at 200.) The District Court also increased 

Fumo‘s term of imprisonment to 61 months and ordered him to perform community 

service as a condition of his special release. 

At Arnao‘s resentencing hearing, both the prosecutor and Arnao‘s own defense 

counsel vigorously objected to the District Court‘s apportionment of the Citizens Alliance 

restitution. The District Court nevertheless reaffirmed its determination to require each 

co-Defendant to pay half of the restitution owed to this victim. 

II.

We begin with Fumo‘s theory that the District Court exceeded the scope of this 

Court‘s own mandate by increasing the restitution amounts on remand.

1

 The District 

Court properly observed that, even though the government objected to the restitution 

order (as part of its loss calculation arguments), ―the Third Circuit only considered 

 

1

 The District Court had jurisdiction over this criminal case pursuant to 18 U.S.C. § 

3231, and we have appellate jurisdiction under 18 U.S.C. § 3742 and 28 U.S.C. § 1291. 

The District Court‘s interpretation and application of our own mandate is subject 

to plenary review. See, e.g., Kilbarr Corp. v. Bus. Sys. Inc., 990 F.2d 83, 87-88 (3d Cir. 

1993). On the other hand, the parties agree that we must review the District Court‘s 

apportionment of the Citizens Alliance restitution under an abuse of discretion standard.
6

restitution in the context of Mr. Fumo‘s argument as to the award of pre-interest judgment 

(sic) on the restitution amount.‖ (Gov‘t‘s App. at 200 (alteration in original).) Our 

statement about affirming the restitution order expressly referenced this prejudgment 

interest issue, and it actually appeared at the end of a section entitled ―Prejudgment 

interest on the order of restitution,‖ in which we rejected Fumo‘s own arguments

against any award of prejudgment interest. Fumo, 655 F.3d at 319-21. In contrast, we 

did determine in this prior opinion that the District Court committed a number of 

reversible errors in its loss calculations under the Guidelines. As the District Court 

observed, ―given the fact that the Third Circuit clearly found my loss fraud calculation to 

be erroneous, and given the fact that my restitution award was based on those now 

erroneous fraud loss calculations, it would be surprising if they had so explicitly affirmed 

the restitution order.‖ (Gov‘t‘s App. at 200.) 

Under these circumstances, the District Court satisfied its obligation to 

― ̳implement both the letter and spirit of the mandate, taking into account the appellate 

court‘s opinion and the circumstances it embraces.‘‖ Kilbarr, 990 F.2d at 87-88 (quoting 

Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir. 1985)). After all, 

we expressly affirmed Fumo‘s conviction, vacated both his sentence and the sentence of 

Arnao, and (rather generally) remanded for resentencing and for further proceedings not 

inconsistent with our opinion. The District Court also appropriately turned to the wellestablished ―sentencing package‖ doctrine to support its approach to the restitution 

amounts on remand. See, e.g., Pepper v. United States, 131 S. Ct. 1229, 1251 (2011)
7

(―Because a district court‘s  ̳original sentencing intent may be undermined by altering one 

portion of the calculus,‘ an appellate court when reversing one part of a defendant‘s 

sentence  ̳may vacate the entire sentence . . . so that, on remand, the trial court can 

reconfigure the sentencing plan . . . to satisfy the sentencing factors in 18 U.S.C. § 

3553(a).‘‖ (citations omitted) (alterations in original)). 

We now turn to the government‘s challenge to the District Court‘s apportionment 

of the Citizens Alliance restitution.2 The Mandatory Victims Restitution Act (―MVRA‖) 

includes a specific provision for cases involving more than one defendant:

If the court finds that more than 1 defendant has contributed to the loss of a 

victim, the court may make each defendant liable for payment of the full 

amount of restitution or may apportion liability among the defendants to 

reflect the level of contribution to the victim‘s loss and economic 

circumstances of each defendant.

18 U.S.C. § 3664(h). An important purpose of the MVRA as well as the Victim and 

Witness Protection Act (―VWPA‖) ― ̳is to ensure that wrongdoers, to the degree possible, 

 

2

 We further note that the government‘s abandonment of its appeal from the District 

Court‘s resentencing of Arnao does not have any substantial effect on our present 

discussion. In short, it would make no practical difference to the current appellate 

proceeding whether or not Arnao was ordered to pay a particular share of the Citizens 

Alliance restitution, or even was held jointly and severally liable for the entire amount. 

The government appropriately notes that there was no real point in pursuing the Arnao 

appeal because she could not even pay the share apportioned to her by the District Court. 

The government also points out that, if Fumo was ultimately ordered to pay the entire 

amount (and thereby held jointly and severally liable as to Arnao‘s own share), Arnao 

then would be relieved of meeting her existing obligation because the money would 

immediately be collected from Fumo. In fact, Fumo himself defends the District Court‘s 

apportionment on the grounds that, ―[i]f joint and several liability had been imposed 

again, as it was at the original sentencing, then all the the [sic] money would have been 

collected from Mr. Fumo and none paid by Ms. Arnao, as Judge Buckwalter well 

understood.‖ (Fumo‘s Second-Step Br. at 36 (citation omitted).) 
8

make their victims whole.‘‖ Fumo, 655 F.3d at 321 (quoting United States v. Rochester, 

898 F.2d 971, 983 (5th Cir. 1990)); see also, e.g., United States v. Simmonds, 235 F.3d 

826, 830-31, 833 (3d Cir. 2000). 

Based on the statutory language, the MVRA contemplates two factors: culpability 

and ability to pay. With respect to the first MVRA factor, the District Court repeatedly 

indicated that Fumo and Arnao were ―equally‖ culpable. It stated at the end of Fumo‘s 

own resentencing hearing that ―I think the area of culpability here is equal.‖ (Gov‘t‘s 

App. at 201.) At the subsequent resentencing hearing held for Arnao, the District Court 

likewise found that, ―from the testimony[,] I heard that it‘s impossible to assess anything 

other than 50/50‖ and, while Arnao ―may have been unduly influenced by Fumo,‖ they 

were ―both equally responsible for what happened down there at Citizens Alliance.‖ (Id.

at 218-19.) We, however, conclude that these culpability findings had no real support in 

the record and that the District Court abused its discretion in its application of the initial

statutory factor. 

The government provides an extensive factual account of the respective roles 

played by the co-Defendants in the Citizens Alliance fraud. In short, the evidence clearly 

established that Fumo initiated and directed the fraud. For instance, Fumo testified at the 

trial that ―I viewed it [Citizens Alliance] as my non-profit‖ and ―my entity, my baby.‖ 

(Gov‘t‘s App. in Prior Appeals at 4016.) ―I asked that Citizens‘ [sic] Alliance pay things 

and they did. I did – and I expected them to.‖ (Id. at 4170.) While, among other things, 

the prosecutor stated at Arnao‘s resentencing hearing that the Citizens Alliance fraud 
9

―wouldn‘t have happened without her‖ (Gov‘t‘s App. at 211), she actually functioned as a 

loyal aide carrying out the orders of her boss—the real mastermind behind the fraud itself. 

In other words, Arnao wrote out the checks, handled the paperwork, and performed 

similar tasks on Fumo‘s behalf and at his direction. 

Given his dominant role, it is not surprising that the Citizens Alliance fraud largely 

benefited Fumo‘s own personal and political interests. As the government explains, 

Fumo reaped approximately 96% of the gains or benefits arising out of the fraud—while

Arnao was left with the remaining 4%. The government then provides many examples of 

the benefits he obtained, such as $43,029.52 to purchase tools and similar items for his 

collection as well as $20,000 to finance a lawsuit against one of his own political rivals. 

In turn, it appears that ―loss‖ and ―gain‖ were identical in this case because the 

government itself only calculated actual loss and included only losses that were actually 

pocketed by the two co-Defendants.

With respect to the second ―economic circumstances of each defendant‖ factor, the 

District Court stated at Fumo‘s resentencing hearing that Arnao ―has the ability to pay and 

should.‖ (Gov‘t‘s App. at 201.) In resentencing Arnao, it further explained that, while 

her financial resources ―aren‘t anywhere near what Fumo‘s is [sic], I still think I‘m going 

to impose upon you that burden to pay half the restitution, rather than making a [sic] joint 

and several liability.‖ (Id. at 219.) We again conclude that the District Court abused its 

discretion. 

The 2009 presentence investigation report (―PSR‖) showed that Fumo had a net 
10

worth of $11,291,472.56, a monthly income totaling $88,757, and a net monthly cash 

flow of $43,994.72. Fumo accordingly has met all of the financial obligations imposed in 

this criminal case, paying, to date, more than $3 million (including the $783,264 he was 

ordered to pay as restitution to Citizens Alliance). Under the circumstances, he clearly 

possesses the means to pay the remaining share of the Citizens Alliance apportioned to 

Arnao by the District Court—and to do so immediately. In fact, Fumo defends the 

District Court‘s apportionment on the basis that, if he had been made jointly and severally 

liable for the full amount, Arnao would not bear any of the burden of repaying the victim 

because all of the money would have been promptly collected from Fumo himself. 

Arnao‘s own PSR indicated that Arnao and Mitchell Rubin, her husband, had a net 

worth of $1,454,581 (a figure including Arnao‘s separate ownership of a pension worth 

$76,536, as well as jewelry valued at $41,500). She then had a monthly income from her 

salary of $3,208, while her husband earned $72,833 per month from his own salary and 

business income. The couple ultimately possessed a net monthly cash flow of $47,188. 

Although certainly not destitute, Arnao was obviously much less well off than her multimillionaire co-Defendant. The government further points to the difficulties it faces in 

reaching joint assets and observes that the economic situation of Arnao and her husband 

has materially deteriorated since this PSR was prepared in 2009 (e.g., Arnao lost her state 

pension as a result of her criminal convictions). 

The Probation Office proposed a payment schedule of $1,000 per month based on 

Arnao‘s current economic circumstances. On May 14, 2002, the District Court entered an 
11

order amending the criminal penalties ―to include that payment shall be due in monthly 

installments of no less than $1,000.00, pending further report by the U.S. Probation 

Office.‖ (Gov‘t‘s Supp. App. at 5 (emphasis omitted).) At this approved rate, it will take 

more than 60 years for Arnao (who is in her late-50s) to pay her current share of the 

Citizens Alliance restitution. Simply put, this means that Citizens Alliance will never be

reimbursed for its losses. Fumo, in contrast, could easily—and immediately—pay the 

remaining share of the restitution owed to this victim. In the end, the result reached by 

the District Court is inconsistent with an important purpose of restitution itself—to ensure 

that, to the extent possible, victims are made whole. See, e.g., Fumo, 655 F.3d at 321.

We therefore determine that the District Court abused its discretion under the 

MVRA. The government asks us to direct the District Court to impose on Fumo the 

obligation to pay full restitution to Citizens Alliance (and thereby be held jointly and 

severally liable for Arnao‘s own share). Given the deferential nature of our standard of 

review, we will refrain from doing so. We will instead adopt a less drastic alternative

suggested by the government. Accordingly, the District Court‘s sentence will be vacated 

insofar as it ordered Fumo to pay only half of the restitution owed to Citizens Alliance. 

We will then remand this matter to the District Court with specific instructions to

determine Fumo‘s share of the Citizens Alliance restitution on the basis of the applicable 

statutory factors as well as the actual evidence in this case. However, we add that, given

the evidence, the District Court would—yet again—abuse its discretion if it failed either: 

(1) to order Fumo to pay all of the Citizens Alliance restitution; or (2) at the very least, to
12

apportion Fumo‘s share of the restitution in such a way as to reflect the clearly 

disproportionate culpability and economic circumstances of the two co-Defendants and to 

ensure that, to the extent possible, Citizens Alliance itself will be made whole. It is also 

undisputed that the District Court erroneously included prejudgment interest on restitution 

that Fumo had already paid prior to the resentencing date. Accordingly, the District 

Court‘s sentence will be vacated as to the calculation of prejudgment interest, and we will 

remand with specific instructions to make a proper prejudgment interest calculation. 

III.

For the foregoing reasons, the criminal sentence entered by the District Court will 

be affirmed in part and vacated in part. We will affirm the sentence insofar as it 

increased the restitution amounts that Fumo was required to pay to his victims. We will 

vacate the sentence insofar as it ordered Fumo to pay only half of the restitution owed to 

Citizens Alliance. We will also vacate the sentence as to the calculation of prejudgment 

interest. Finally, we will remand this matter to the District Court with specific 

instructions to determine Fumo‘s share of the Citizens Alliance restitution on the basis of 

the applicable statutory factors as well as the actual evidence in this case and to make a 

proper prejudgment interest calculation.