February 13, 2013

By: Third Circuit Sides With Government And Orders Fumo To Shoulder More Of The Restitution Burden

In the appeal of former Pennsylvania State Senator, Vincent J. Fumo, the U.S. Court of Appeals for the Third Circuit has ordered Fumo to pay a larger share of the restitution to one of his victims.  With its decision, the Court rejected the arguments raised by Fumo in his appeal and only partially granted the government’s request for relief.

This case marked Fumo’s second appeal to the Third Circuit.  In 2009, Mr. Fumo was convicted of 137 counts of fraud, tax evasion, and obstruction of justice based on allegations that he defrauded the Citizens Alliance, a non-profit which he founded, as well as the Pennsylvania State Senate and Independence Seaport Museum.  After successfully appealing his sentence from the district court in 2011, Fumo was re-sentenced in November 2011 to 55 months imprisonment and ordered to pay $3,340,839 in restitution to be apportioned among the three institutions defrauded by Fumo:  $792,802 to the Citizens Alliance; $1,413,819 to the State Senate; and $134,217 to the Independence Seaport Museum.   Both Fumo and Ruth Arnao, a former aide to Fumo and director of Citizens Alliance, were ordered to pay the Citizens Alliance restitution amount “jointly and severally.”

Although the Third Circuit refused to impose the full amount on Fumo, it agreed that Fumo and Arnao should not be saddled with equal restitution amounts due to their differing “culpability and ability to pay.” 

In this appeal, the government challenged the district’s court joint and several apportionment of the Citizens Alliance restitution between Fumo and Arnao.  Although the Third Circuit refused to impose the full amount on Fumo, it agreed that Fumo and Arnao should not be saddled with equal restitution amounts due to their differing “culpability and ability to pay.”  The Third Circuit found that the district court lacked sufficient support to conclude that Fumo and Arnao were equally culpable.  Similarly, regarding the ability to pay restitution, the Third Circuit noted a dramatic contrast between the financial resources of Fumo and Arnao.  Fumo has a net worth of over $11 million and a monthly income of $88,757.  On the other hand, Arnao has a net worth of over $1.4 million and a monthly income of $3,208.  Based on this reasoning, the Third Circuit remanded the case to the district court with instructions to reapportion the Citizens Alliance restitution between Fumo and Arnao.

This time around, the court rejected Fumo’s arguments.  Fumo claimed that the district court, when it increased the restitution amounts on remand, exceeded its prior mandate from the Third Circuit.  In its rejection of this argument, the court observed that the district court’s most recent sentence was consistent with its prior sentence.  The court found that it was appropriate for the district court to rely on the “sentencing package” doctrine which acknowledges that, “[b]ecause a district court’s ‘original 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.”

The full text of the opinion can be found here:   http://www.ca3.uscourts.gov/opinarch/114499np.pdf