Supreme Court will hear case of bankers against government Three from Okla. say they face double punishment

April 15, 1997|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- The Supreme Court agreed yesterday to rule on the government's power to impose fines and then bring criminal charges against those who break federal regulatory rules.

Three Oklahoma bankers claimed in their appeal that this amounts to double punishment for the same misconduct, a violation of the Constitution's ban on "double jeopardy."

In recent years, the court has ruled repeatedly on claims of double punishment, but still has not spelled out clearly how far government agencies may go in using both civil fines and criminal punishment in tandem to get at wrongdoers.

In the Oklahoma case, a federal appeals court ruled last year that civil fines imposed by a federal agency for violating banking laws are not punitive in nature, so they do not bar a later criminal prosecution for the same behavior.

If a fine helps compensate the agency for its loss, then a fine is considered to be "remedial," and not punitive, the appeals court said. In this case, it added, the $44,000 fine was not far out of line with the government's $72,000 cost of investigating their case.

Oklahomans John Hudson, Larry Baresel and Jack Butler Rackley took the case to the Supreme Court, trying to head off a criminal prosecution for allegedly misusing funds of three Oklahoma banks by making illegal loans. The loans allegedly caused two of the banks to fail.

They had already been fined the $44,000 by the U.S. comptroller of the currency, regulator of national banks. They argued that the fines were not meant to compensate the agency for its investigation costs, but rather to punish them for breaking the banking laws. After the civil proceeding was over, Justice Department prosecutors obtained a criminal indictment of the three bankers on charges of criminal conspiracy, misuse of bank funds and making false entries in bank records.

The Supreme Court is expected to decide next year whether the criminal case may go forward.

Pub Date: 4/15/97

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