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United States v. Rusk
Citations: 96 F.3d 777; 1996 WL 539674Docket: 95-40884
Court: Court of Appeals for the Fifth Circuit; September 26, 1996; Federal Appellate Court
Original Court Document: View Document
Benny L. Rusk served as president and majority shareholder of First State Bank of Liberty, Texas, from 1952 until 1989. Following an FDIC examination in October 1988, Rusk was found to have misappropriated bank funds, including loans intended for other individuals that benefited him personally, and received $214,000 in improperly expensed legal fees and $175,000 from a credit life rebate account. The FDIC recommended his suspension, and on April 27, 1989, served Rusk with a Notice of Intention to Remove from Office and to Prohibit from Participation. Rusk returned $389,769 to the bank in restitution prior to the Notice's filing and later consented to an order barring him from participating in any FDIC-insured bank's affairs without permission. He was indicted on multiple counts, including conspiracy and false statements, on March 11, 1992. Rusk's motion to dismiss the indictment, based on double jeopardy claims citing the FDIC's prior actions as punishment, was denied by the district court, which stayed the criminal proceedings pending appeal. Rusk argued that the FDIC sanctions were punitive, referencing the restitution, debarment, and loss of stock value. However, the court determined that the restitution was remedial, aimed at returning stolen funds, and noted that other circuits have held that debarment does not constitute punishment for double jeopardy purposes. In United States v. Bizzell, 921 F.2d 263, 267 (10th Cir. 1990), the court ruled that a three-year debarment by HUD is not punitive. Other circuits have similarly concluded that debarment orders under 12 U.S.C. 1818 serve a remedial purpose aimed at protecting the banking industry rather than serving as punishment. The Office of the Comptroller of the Currency's (OCC) debarment is justified as a means to maintain the integrity of the banking system and safeguard depositors' interests, without needing to also act as a deterrent. Judge Selya emphasized that the core aim of debarment is to eliminate corruption in sensitive industries and protect the public, confirming its remedial nature. Rusk's claim that the loss in stock value resulted from the FDIC's debarment order, constituting punishment, was rejected. The court noted that any stock value loss is a collateral consequence of debarment, not a direct result of the order. The decrease in stock value was attributed to market reactions following Rusk's departure from the bank. The court found no legal basis to consider collateral consequences as part of the sanction itself. Thus, the FDIC's actions were deemed remedial, not punitive, and the district court's denial of Rusk's motion was affirmed.