Court Opinion

ID: 9409011
Source: CourtListenerOpinion
Date Created: 2023-07-14 17:00:41.358656+00
Date Added: 2024-06-11T17:20:48.264759
License: Public Domain

PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
           _______________

                No. 22-2085
              _______________

      UNITED STATES OF AMERICA

                       v.

        JOHN SHERMAN JUMPER,
                      Appellant
            _______________

On Appeal from the United States District Court
    for the Middle District of Pennsylvania
   (D.C. Criminal No. 4:18-cr-00128-001)
 District Judge: Honorable Matthew W. Brann
               _______________

Submitted Under Third Circuit L.A.R. 34.1(a):
              June 12, 2023
            _______________

 Before: PORTER, FREEMAN, and FISHER,
              Circuit Judges

             (Filed: July 14, 2023)
              _______________
Edward J. Rymsza, III
Miele & Rymsza
125 East Third Street
Williamsport, PA 17701

             Counsel for Appellant

Navin Jani
Office of the United States Attorney
228 Walnut Street
Suite 220, P.O. Box 11754
Harrisburg, PA 17101

George J. Rocktashel
Office of the United States Attorney
240 W Third Street
Suite 316
Williamsport, PA 17701

             Counsel for Appellee
                    _______________

                OPINION OF THE COURT
                    ______________

PORTER, Circuit Judge.

        The District Court sentenced John Jumper to 78
months’ imprisonment and ordered him to pay restitution for
fraudulently transferring assets from a company pension plan
to his own accounts. In a civil securities action for the same
misconduct, a district court in Tennessee disgorged Jumper of
his ill-gotten gains. Jumper appeals his sentence. He asserts

                              2
that his criminal sentence violates the Double Jeopardy Clause
and principles of collateral estoppel. He also claims that the
District Court improperly concluded that the Bureau of Prisons
(BOP) could treat his medical issues. We will affirm the crim-
inal sentence.

                               I

        Jumper was a securities broker-dealer in Memphis,
Tennessee. Acting in that capacity, he arranged financing on
behalf of a group of private investors for the purchase of Snow
Shoe Refractories, LLC, a Pennsylvania fire-brick manufac-
turer. Jumper fraudulently obtained authority to transfer Snow
Shoe’s pension plan assets by forging the majority stake-
holder’s signature on several documents. Between 2007 and
2016, Jumper transferred $5.7 million from the pension plan to
accounts he controlled.

        The government pursued both civil and criminal actions
against Jumper. The Securities and Exchange Commission
(SEC) filed a civil complaint against Jumper for securities
fraud in the Western District of Tennessee. And the
Department of Justice filed criminal charges against Jumper in
the Middle District of Pennsylvania. In the civil action, the
Tennessee District Court entered a default judgment for the
SEC and ordered Jumper to disgorge all $5.7 million of ill-
gotten gains and to pay prejudgment interest of $726,758.79.
In the criminal proceedings, Jumper pleaded guilty to one
count of wire fraud. As part of his plea agreement, Jumper
agreed to make full restitution and the parties stipulated to a
loss of $1.5 to $3.5 million.

       At criminal sentencing, Jumper requested a downward
departure or variance based on various medical issues. The

                              3
District Court considered his request, heard argument from
Jumper and his counsel, and discussed the relevant 18 U.S.C.
§ 3553(a) factors. The District Court denied Jumper’s requests,
explaining, “it would appear that the Bureau of Prisons is
equipped to provide consistent and adequate medical care.”
App. 125a; see also App. 146a.

        The District Court sentenced Jumper to 78 months’
incarceration, a sentence at the bottom of the Guidelines range
of 78–97 months, and ordered him to pay $2,426,550 in resti-
tution. At Jumper’s request, the District Court recommended
that Jumper be placed in either a BOP medical facility or a
prison with a medical facility. Jumper appealed his sentence.

                              II

      The District Court had jurisdiction under 18 U.S.C.
§ 3231. We have jurisdiction under 18 U.S.C. § 3742.

       We review challenges under the Double Jeopardy
Clause de novo. United States v. Ayala, 917 F.3d 752, 759 (3d
Cir. 2019). We review the procedural and substantive reasona-
bleness of a sentence under an abuse of discretion standard.
United States v. Tomko, 562 F.3d 558, 567–68 (3d Cir. 2009)
(en banc). “[I]f the district court’s sentence is procedurally
sound, we will affirm it unless no reasonable sentencing court
would have imposed the same sentence on that particular
defendant for the reasons the district court provided.” Id. at
568.

                              4
                               III

                               A

       Jumper asserts that his criminal sentence violates the
Double Jeopardy Clause because he was already penalized
with disgorgement in a civil suit brought by the SEC in the
Western District of Tennessee. Today, we join every other cir-
cuit to address the issue in holding that the Double Jeopardy
Clause does not prevent a person subject to a disgorgement
order from being criminally sentenced for the same conduct.

        The Double Jeopardy Clause of the Fifth Amendment
instructs 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. “[T]he Double Jeopardy Clause does not prohibit the impo-
sition of any additional sanction that could, in common par-
lance, be described as punishment.” Hudson v. United States,
522 U.S. 93, 98–99 (1997) (citation and quotation marks omit-
ted). Instead, it “protects only against the imposition of multi-
ple criminal punishments for the same offense.” Id. at 99 (cita-
tions and parenthetical information omitted). Hudson provides
us with a framework for deciding “[w]hether a particular pun-
ishment is criminal or civil.” Id.

       Eight circuits have preceded us in holding that disgorge-
ment is not a criminal punishment and thus does not implicate
the Double Jeopardy Clause. See United States v. Bank, 965
F.3d 287, 296–97 (4th Cir. 2020); United States v. Dyer, 908
F.3d 995, 1003–04 (6th Cir. 2018); United States v. Melvin,
918 F.3d 1296, 1301 (11th Cir. 2017); United States v. Van
Waeyenberghe, 481 F.3d 951, 959 (7th Cir. 2007); United
States v. Perry, 152 F.3d 900, 904 (8th Cir. 1998); SEC v.
Palmisano, 135 F.3d 860, 866 (2d Cir. 1998); United States v.

                               5
Gartner, 93 F.3d 633, 635 (9th Cir. 1996); SEC v. Bilzerian,
29 F.3d 689, 696 (D.C. Cir. 1994). These cases guide our anal-
ysis under Hudson.

        Beginning with the statutory text, we “ask whether the
legislature, ‘in establishing the penalizing mechanism, indi-
cated either expressly or impliedly a preference for one label
or the other.’ ” Hudson, 522 U.S. at 99 (quoting United States
v. Ward, 448 U.S. 242, 248 (1980)). We conclude that
“Congress expressly established a preference for disgorgement
to be a civil remedy.” See Dyer, 908 F.3d at 1002. The district
court in Jumper’s SEC action ordered disgorgement under 15
U.S.C. § 78u(d)(5), which gives federal courts the authority to
grant “equitable relief.” Red 5. See Liu v. SEC, 140 S. Ct. 1936,
1940 (2020) (“a disgorgement award that does not exceed a
wrongdoer’s net profits and is awarded for victims is equitable
relief permissible under § 78u(d)(5)”). “[S]uits in equity are
considered civil actions.” Bank, 965 F.3d at 298 (citation omit-
ted). And § 78u(d) is labeled, in relevant part, “money penal-
ties in civil actions.” 1 See Hudson, 522 U.S. at 103 (finding
that Congress intended money penalties to be civil in nature

1
  In 2021, Congress added disgorgement to the list of
remedies that a district court could grant in a civil action
brought by the SEC for securities violations. William M.
(Mac) Thornberry National Defense Authorization Act for
Fiscal Year 2021, Pub. L. No. 116-283, § 6501, 134 Stat.
3388, 4625–26 (codified at 15 U.S.C. § 78(u)(d)(3)(ii),
(u)(d)(7)). Previously, courts looked to scattered statutes, like
§ 78(u)(d)(3), to derive a legal basis for the remedy. See
Bank, 965 F.3d at 297.

                                6
because 12 U.S.C. § 93(b)(1) “expressly provide[d] that such
penalties [were] ‘civil’ ”).

       At step two of the Hudson analysis, we “inquire[] fur-
ther whether the statutory scheme was so punitive either in pur-
pose or effect, as to transform what was clearly intended as a
civil remedy into a criminal penalty.” Id. at 99 (quotation
marks, alterations, and citations omitted). Only the “clearest
proof” can “transform what has been denominated a civil rem-
edy into a criminal penalty.” Id. at 100 (quoting Ward, 448 U.S.
at 249). For guidance, we look to the seven Kennedy factors:

       (1) [w]hether the sanction involves an affirma-
       tive disability or restraint;

       (2) whether it has historically been regarded as a
       punishment;

       (3) whether it comes into play only on a finding
       of scienter;

       (4) whether its operation will promote the tradi-
       tional aims of punishment—retribution and
       deterrence;

       (5) whether the behavior to which it applies is
       already a crime;

       (6) whether an alternative purpose to which it
       may rationally be connected is assignable for it;
       and

       (7) whether it appears excessive in relation to the
       alternative purpose assigned.

                               7
Id. at 99–100 (quotation marks omitted) (quoting Kennedy v.
Mendoza-Martinez, 372 U.S. 144, 168–69 (1963)).

        We find there is insufficient evidence “to transform
what was clearly intended as a civil remedy into a criminal pen-
alty.” Id. at 99 (quotation marks, alteration, and citation omit-
ted). “Although disgorgement . . . appl[ies] to conduct that may
also be prosecuted under a criminal statute, and [] posses[es]
some characteristics common to criminal laws, such as requir-
ing scienter and effecting deterrence, . . . disgorgement . . . [has
not] historically been viewed as punishment.” Palmisano, 135
F.3d at 866 (citation omitted). Instead, money penalties have
“been recognized as enforc[ea]ble by civil proceedings since
the original revenue law of 1789.” Hudson, 522 U.S. at 104
(citing Helvering v. Mitchell, 303 U.S. 391, 400 (1938)); see
Act of July 31, 1789, ch. 5, § 36, 1 Stat. 29, 47. Even more,
disgorgement, which requires a person to dispense only with
ill-gotten gains, does not involve an “affirmative disability or
restraint” approaching that of imprisonment. See id. And it
advances other nonpunitive purposes such as “ensuring that
defendants do not profit from their illegal acts, encouraging
investor confidence, increasing the efficiency of financial mar-
kets, and promoting stability of the securities industry.” Bank,
965 F.3d at 300 (citations and quotation marks omitted).

        Instead of challenging the consensus of authority from
other circuits or attempting to classify disgorgement as a crim-
inal punishment under Hudson, Jumper argues that the
Supreme Court abrogated those cases in Kokesh v. SEC when
it labeled disgorgement “a penalty.” 581 U.S. 455, 463 (2020);
see Appellant’s Br. 15. Similar arguments were rejected by the
Fourth and Sixth Circuits in Bank and Dyer. See Bank, 965
F.3d at 301; Dyer, 908 F.3d at 1003.

                                 8
        Because the Court concluded in Kokesh that disgorge-
ment is a civil, not criminal, penalty, it does not disrupt our
conclusion. Specifically, the Court held that “disgorgement
constitutes a penalty within the meaning of [28 U.S.C.]
§ 2462.” 581 U.S. at 463. Section 2462 defines the statute of
limitations for “any civil fine, penalty, or forfeiture.” 28 U.S.C.
§ 2462 (emphasis added). “Civil,” in this context, modifies
“fine,” “penalty,” and “forfeiture.” See Antonin Scalia and
Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts 147 (2012) (Series-Qualifier Canon). So a “penalty
within the meaning of § 2462” is a “civil penalty.” Cf. Gabelli
v. SEC, 568 U.S. 442, 444–45 (2013) (referring to § 2462 as
“the general statute of limitations for civil penalty actions”).
The Double Jeopardy Clause “protects only against the impo-
sition of multiple criminal punishments for the same offense.”
Hudson, 522 U.S. at 99.

      We hold that the District Court did not violate the
Double Jeopardy Clause by issuing a criminal sentence to
Jumper.

                                B

        Relatedly, Jumper raises a collateral estoppel, or issue
preclusion, claim. It is true that the Double Jeopardy Clause
“embodies principles of collateral estoppel that can bar the
relitigation of an issue actually decided in a defendant’s favor
by a valid and final judgment.” United States v. Merlino, 310
F.3d 137, 141 (3d Cir. 2002) (citing Ashe v. Swenson, 397 U.S.
436, 443 (1970)). But Jumper does not point to the issue that
was decided in his favor that he thinks should be barred from
relitigation. On the contrary, the district court in Tennessee
entered default judgment against Jumper, so it is not readily

                                9
apparent that any issues were actually litigated and decided in
his favor.

       We hold that the imposition of Jumper’s criminal sen-
tence is not barred by principles of collateral estoppel.

                                 C

        Finally, Jumper asserts that the District Court erred
when it failed to grant a downward departure or variance based
on his medical conditions. Specifically, he claims that the
District Court improperly concluded that the BOP had medical
facilities capable of treating his impairments. We hold that the
District Court did not abuse its discretion because the sentence
was procedurally sound and substantively reasonable.

        When a defendant alleges procedural error, “we must
ensure that the district court did not fail to calculate (or miscal-
culate) the Guidelines range; treat the Guidelines as manda-
tory; gloss over the § 3553(a) factors; choose a sentence based
on a clearly erroneous fact; or inadequately explain the chosen
sentence.” United States v. Brito, 979 F.3d 185, 189 (3d Cir.
2020) (citing Gall v. United States, 552 U.S. 38, 51 (2007)).
We presume that procedurally sound sentences within the
Guidelines are reasonable. United States v. Handerhan, 739
F.3d 114, 119–20 (3d Cir. 2014). And we affirm unless we
believe that “no reasonable court would have imposed that sen-
tence for the reasons provided.” Brito, 979 F.3d at 189 (citing
Tomko, 562 F.3d at 568).

       A district court may depart downward from the calcu-
lated Guidelines range for “[a]n extraordinary physical impair-
ment.” U.S. Sent’g Guidelines Manual § 5H1.4 (U.S. Sent’g
Comm’n 2018). We lack jurisdiction to review a discretionary

                                10
denial of a downward departure “once we determine that the
district court properly understood its authority to grant a depar-
ture.” United States v. Minutoli, 374 F.3d 236, 239 (3d Cir.
2004). Because the District Court recognized that it could grant
a downward departure for an extraordinary medical condition,
we lack jurisdiction to review its denial of Jumper’s request for
such a departure.

        A district court must “consider [] the need for the sen-
tence imposed [] to provide the defendant with needed . . .
medical care” before announcing a sentence. 18 U.S.C.
§ 3553(a)(2)(D). We require courts to explain their decision on
the record so that we can satisfactorily review the sentence for
reasonableness. Rita v. United States, 551 U.S. 338, 356–57
(2007). But “brevity is not error per se.” United States v.
Jackson, 467 F.3d 834, 842 (3d Cir. 2006). And we may affirm
if the record makes clear that the court “listened to each argu-
ment[,] . . . considered the supporting evidence[,] . . . was fully
aware of defendant’s various physical ailments and imposed a
sentence that [took] them into account.” Rita, 551 U.S. at 358.

        The record makes clear that the District Court ade-
quately considered Jumper’s medical needs before imposing
the sentence and did not commit any procedural error. The
Court reviewed Jumper’s sentencing memorandum, which
contained a detailed description of his medical needs as well as
letters from his physicians and pastor. It heard from Jumper
and his attorney, who specifically argued that the BOP would
be unable to treat his client’s medical needs. It discussed the
relevant § 3553(a) factors. And it concluded, “it would appear
[that the BOP] is equipped to provide consistent and adequate
medical care for [Jumper]” before imposing a sentence that
was reasonable, appropriate, and “not greater than necessary to
meet sentencing objectives.” App. 146a–47a.

                                11
       We also find Jumper’s sentence to be substantively rea-
sonable. It was at the bottom of the Guidelines range, and the
District Court noted Jumper’s medical issues for the BOP and
recommended that he be placed at a BOP medical facility or a
prison with a medical facility. 2 There is no evidence in the rec-
ord that would lead us to believe the BOP was not capable of
treating Jumper’s medical conditions.

       Jumper submits, incorrectly, that the District Court was
required to factually investigate whether the BOP was able to
treat his impairments. He cites several cases, none of which
stand for his proposition that it is an abuse of discretion to deny
a sentence departure without factual evidence of the BOP’s
ability to deliver specific medical care. 3 To be sure, many

2
  Jumper alleges that he has not been placed in a BOP
medical facility. The appropriate avenues for contesting the
adequacy of BOP medical care are the prison’s administrative
grievance procedures and the Eighth Amendment, not a
sentence appeal.
3
  Jumper cites two cases that stand for a logically dissimilar
rule: it was permissible for the district court to disregard
boilerplate language from the BOP regarding medical
capabilities when granting a downward departure. See United
States v. Martin, 363 F.3d 25, 50 (1st Cir. 2004); United
States v. Gee, 226 F.3d 885, 902 (7th Cir. 2000). He cites two
cases in which the appellate court vacated a sentence because
the district court granted a departure without explaining how
the defendant was entitled to one. See United States v. Schein,
31 F.3d 135, 138 (3d Cir. 1994); United States v. Carey, 895
F.2d 318, 320 (7th Cir. 1990). And he cites one case in which
the appellate court disagreed with the district court’s

                                12
inmates suffer from physical impairments. And Jumper has not
explained how or why the BOP’s typical medical care would
be lacking in his case, or why it was unreasonable for the
District Court to conclude that the BOP was capable of treating
him.

       We hold that the District Court did not abuse its discre-
tion when it denied Jumper’s requests for a downward depar-
ture and variance.

                          *      *      *

         For the reasons stated above, we will affirm the District
Court.

departure denial because it disregarded U.S.S.G. § 5H1.4
entirely. See United States v. Fisher, 55 F.3d 481, 484–85
(10th Cir. 1995) (quoting district judge as explaining “I am
not in the business of rehabilitation in this case, I am in the
business of punishing the sale of L.S.D.”).

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