Two years ago, Buckwalter ordered Fumo and a former aide convicted with him, Ruth Arnao, to split 50/50 about $1.6 million in restitution due a South Philadelphia civic-improvement organization.
But federal prosecutors Robert A. Zauzmer and John J. Pease challenged that. They said Fumo should pay virtually all the $1.6 million himself.
They argued that Arnao, working for a hospice company, would take decades to pay her share. In contrast, they said, Fumo was a multimillionaire who could easily pay the entire debt at once.
Moreover, they said, he directed the crime and reaped almost all of the benefits.
In its ruling, the U.S. Court of Appeals for the Third Circuit endorsed all the prosecutors' arguments. The panel said Arnao had merely been "a loyal aide carrying out the order of her boss, the real mastermind behind the fraud itself."
Fumo's lawyer, Peter Goldberger, said he hoped Buckwalter would not put the entire load on Fumo.
Previously, Goldberger said, it was Buckwalter's "intention that Ruth Arnao not be left off the hook financially. That is what the effect will be if all the money is collected from Fumo."
Patrick Egan, Arnao's lawyer, welcomed the ruling.
"It straightens out a confusing and unfortunate error in the lower court's judgment," Egan said. "It's clear that Fumo received the lion's share of the benefit and therefore he should be responsible for the restitution."
The opinion was the second time the Third Circuit court had reversed Buckwalter.
In 2011, the appeals court ruled that he made numerous legal errors in 2009 in sentencing Fumo to 55 months, a punishment widely denounced as too lenient. In response, Buckwalter added six months to Fumo's term.
Fumo, 69, who had heart bypass surgery last week, is serving his sentence in a Kentucky prison camp. He is on track for release to a halfway house this summer.
For decades the most powerful Philadelphia Democrat in the state legislature, Fumo was found guilty in 2009 of every count he faced.
A federal jury found that he had defrauded the state Senate, the Independence Seaport Museum, and the South Philadelphia civic group, then known as Citizens' Alliance for Better Neighborhoods.
The legal skirmishing over how much Fumo owes has kept restitution in limbo ever since his conviction. Once Buckwalter has the new sentencing hearing on financial issues - expected to take place sometime this year - the way likely will be cleared for disbursement of money now held in escrow.
Court rulings call for Fumo to pay $2.5 million to the state Senate, as well as $136,000 to the museum.
The jury found he defrauded the Senate by overpaying his staff and turning taxpayer-paid workers into personal servants and campaign operatives.
As for the museum, the jury found that Fumo, while on its board, illegally cruised for free on vacations on the museum's luxury motor yachts.
A successor organization to Citizens' Alliance is owed the $1.6 million in that fraud. The jury found that Fumo billed the nonprofit for thousands of dollars in tools and other goods, and used its money for political polls and other unlawful purposes.
Renamed the Passyunk Avenue Revitalization Corp. and purged of its Fumo loyalists, the nonprofit is still cleaning sidewalks, planting trees, and subsidizing storefront shops and restaurants.
Paul Levy, the board chairman of the group, said it would treat the money not as a "sudden windfall," but use it to make "high visibility and general public improvements" on parks, public space, and landscaping. The money owed is more than double the group's yearly budget.
Zauzmer, the prosecutor who joined Pease in building the complex case against Fumo, said he was looking forward to the next hearing. No date has been set.
"We remain committed to obtaining a full recovery for all of the victims," he said. The Passyunk Avenue group, he added, is "working very hard to do positive things in its neighborhood and we hope to to get a full recovery for them very soon."
Contact Craig R. McCoy at 215-854-4821 or email@example.com.