U.S. v. Ciccolini
| Citation | 750 F.Supp.2d 850 |
| Decision Date | 11 November 2010 |
| Docket Number | Case No. 5:10–CR–00290. |
| Parties | UNITED STATES of America, Plaintiff,v.Samuel R. CICCOLINI, Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
OPINION TEXT STARTS HERE
Robert E. Bulford, Jr., Office of the U.S. Attorney, Akron, OH, for Plaintiff.
SENTENCING MEMORANDUM
With this sentencing opinion, the Court seeks to provide a thorough explanation of its sentence of Defendant Samuel R. Ciccolini.
This case presents the Court with a very unusual set of facts. On July 13, 2010, the United States filed an information charging Defendant Samuel Ciccolini with one count of structuring bank transactions to evade reporting requirements in violation of 31 U.S.C. § 5324(a)(3) and one count of making a false income tax return in violation of 26 U.S.C. § 7206(1). [Doc. 1.] On July 23, 2010, the Defendant pled guilty to both counts. [Doc. 4.] On October 20, 2010, Defendant Ciccolini appeared before this Court for sentencing.
Defendant Ciccolini is an ordained Catholic priest. Although assisting with a parish, he has spent most of his working efforts in social welfare programming. He was formerly the Executive Director of the Interval Brotherhood Home, a residential drug and rehabilitation center, located in Akron, Ohio. The Defendant founded the Interval Brotherhood Home in 1970 and has remained closely involved in its operation. Ciccolini was also the president of the S.R. Ciccolini, Interval Brotherhood Home Foundation, Inc. He started the Foundation in 1988 to primarily raise funds to support the Interval Brotherhood Home. The Foundation is funded primarily from contributions, fund-raising activities, and state grants. Throughout its existence, Ciccolini played a major role in its fund-raising efforts. Prior to the filing of these charges, Defendant Ciccolini retained nearly sole and exclusive control over both the Interval Brotherhood Home and its supporting Foundation.
Over time, the Interval Brotherhood Home became a very successful charity. It employs more than eighty full and part time employees to provide treatment services to as many sixty-four men and women on a daily basis. With a 2010 budget of $4.7 million, the Interval Brotherhood Home receives its base funding from the Summit County Mental Health Board. Despite this public source of funding for ongoing operations, Ciccolini and the Foundation sought, and then hoarded, huge amounts of donations. The Foundation has completely paid all costs associated with its purchase and improvement of the Home's facilities and has liquid assets of $13.6 million, almost enough to totally fund the charity for three years even if all state support stopped and no additional donations were received.
The conduct underlying the charged offenses occurred during 2003 and 2004. From April 2003 to June 2003, the Defendant deposited $1,038,680 in cash into his bank accounts in 139 separate transactions of less than $10,000. The Defendant admitted that he structured the transactions to evade bank reporting requirements. 31 U.S.C. § 5324(a)(3). When asked where the money came from, the Defendant claims that he held more than a million dollars in cash in his room at the Immaculate Conception Church Rectory and that he only decided to deposit this money in 2003 because he was worried that changes to the appearance of U.S. currency would somehow diminish the value of his cash savings. Ciccolini also does not explain why he kept over $1 million in cash in his room during a time when he had other bank and investment accounts with millions of dollars. Nor could the Defendant explain why he structured the transactions to avoid the reporting requirements. Similarly, the Defendant is unable to explain where this large sum of cash came from, other than implausibly claiming he accumulated it through interest and savings.
On April 15, 2004, the Defendant submitted a false U.S. income tax return. Specifically, Ciccolini stated that his personal income for 2003 was $101,064, whereas his total income for that year was at least $508,126. After an investigation by the Internal Revenue Service, it was determined that the Defendant had under-reported his taxable income from 2002 through 2005 by $945,635 and that he owed $292,136 in unpaid taxes. 26 U.S.C. § 7206(1). On May 11, 2010, the Defendant provided the government with a cashier's check, payable to the Internal Revenue Service, in the amount of $292,136 as payment of back-taxes.
On October 6, 2010—approximately three weeks before his sentencing—United States Probations received a letter from Timothy J. Killian, President of the Interval Brotherhood Home Foundation. The letter stated that in July 2008, Defendant Ciccolini admitted to the Interval Brotherhood Home that he was under federal criminal investigation and that he had also embezzled $1,288,683 from the Foundation between 2000 and 2007. The letter, and later investigation by Probations, showed that Ciccolini embezzled funds that had been gifted to the Interval Brotherhood Home. Local contractors would donate their services to Interval Brotherhood Home, performing needed repair or construction work for no charge. Ciccolini then recorded an entry into the books of the Foundation, indicating that the Foundation paid the contractors for their services. Ciccolini would then draw a check on Foundation funds—usually made payable to a financial institution—and then would convert that check into cash. Some of the funds from these checks were deposited directly into his bank accounts, but Ciccolini also retained a significant portion as cash. After admitting this scheme to the Foundation, Ciccolini repaid the Foundation the $1,288,683.
After learning that Ciccolini had admitted embezzling Foundation funds and that he had also singly accumulated more than $5 million in a sole-directed trust, the Probations Department conducted a further investigation of Ciccolini's finances. The Probation Department investigation revealed that Defendant Ciccolini possessed significant assets—far outstripping any sums he may have accumulated through legitimate means. At the time of his sentencing, Ciccolini owned a Charles Schwab trust account with $5.2 million—mostly in cash—and separately held $385,973 in deposits at FirstMerit Bank. Bank records show Ciccolini opened the Charles Schwab account in 2008 and that most of the deposits into this account were made in the form of cash, cashier's checks, or as wire transfers from other bank accounts. The Schwab trust account had only limited equities, although it included shares of FirstEnergy stock. It primarily held various municipal bonds, cash equivalents, and government bonds with only limited income flows. At the time of his sentencing, Ciccolini held over $5,590,313 in cash, stocks, and bonds, even after repaying $1,288,683 to the Foundation and after having paid $292,136 in back-taxes earlier in 2010.
The Defendant's holdings at the time of the offense conduct in 2003 and 2004 are less clear, although bank records indicate that his FirstMerit bank account had more than $2 million and we also know Ciccolini had more than $1.1 million cash in his room at the rectory—money he used to illegally structure the financial transactions. In 2008, Ciccolini opened the Schwab trust account, and an analysis of the funding of that account indicates that most of the $5 million was accumulated by 2004. To fund the Schwab account in 2008, in June 2008, Ciccolini transferred $586,144 of cash and $420,000 of stocks from another account. He followed this in July 2008 with a cash deposits of nearly $750,000 and in August with another cash transfer of $734,000 from another account. That September he then transferred an additional $1.2 million cash together with $1.9 million of stock and bonds. He followed these in November 2008 with a cashier check deposit of $252,000. Finally, in December 2008, he transferred $1.65 million of municipal bonds together with an additional $178,000 cash to the account. Apart from one equity holding, the overwhelming majority of the transfers to the Schwab account were conservative money or bond accounts that did not accumulate significant interest.
Defendant Ciccolini's vast wealth is impossible to legitimately explain. Ciccolini grew up in very modest circumstances—his father, a music teacher, died when Ciccolini was fourteen years old. His mother first worked as a housekeeper before working as a technician. He had six siblings. Ciccolini entered the seminary at 18, was ordained in 1969 and by 1986 he was only earning an after-tax income of only $25,700. Presumptively, he earned even less before as a young parish priest. Even assuming that Ciccolini earned the same 1986 salary from 1970 to 1986, he would have received only about $1.2 million in after-tax income from 1970 to 2004 and would only have received after-tax income of about $1.5 million through 2009. Moreover, the Defendant made his own significant charitable donations, especially to the Interval Brotherhood Home Foundation. Through 2004, the Defendant donated about $670,000 of his salary to the Interval Brotherhood Home and by the end of 2007, his donations reached almost $900,000. A rough calculation reveals that after these donations, at best, the Defendant could have legally accumulated a few hundred thousand dollars of earnings over his entire lifetime.
Ciccolini also says that he received gifts and bequests, which he claims help explain his current assets. Ciccolini identifies only approximately $75,000 in gifts that he received before 1999. In all, the Defendant claims to have received about $330,000 in gifts over the course of his tenure at Interval Brotherhood Home, with a total value of gifts through 2004 of about $230,000. In addition, the Defendant also received from his mother as an inheritance now worth approximately $576,000. Included in this inheritance are a $230,000 life insurance policy, and a home worth...
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