United States v. John Jumper

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 22-2085

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UNITED STATES OF AMERICA

v.

JOHN SHERMAN JUMPER,

Appellant

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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

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Submitted Under Third Circuit L.A.R. 34.1(a):

June 12, 2023

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Before: PORTER, FREEMAN, and FISHER,

Circuit Judges

(Filed: July 14, 2023)

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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

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OPINION OF THE COURT

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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

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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.

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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.

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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.

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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.

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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

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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

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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.

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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

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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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