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UNITED STATES DISTRICT COURT 

 EASTERN DISTRICT OF MICHIGAN 

 SOUTHERN DIVISION 

UNITED STATES OF AMERICA, 

Plaintiff, Case No. 2:15CR20382 

Hon. Victoria A. Roberts 

v 

 

PAUL NICOLETTI, 

Defendant 

 / 

GOVERNMENT’S RESPONSE TO ORDER 

REQUIRING SUPPLEMENTAL BRIEFING 

 Defendant Paul Nicoletti has been convicted of bank fraud, resulting in a loss 

to his victims of approximately $5,299,751.58. At sentencing, he was ordered to 

pay restitution in the amount of $5,478,751.581

 and a special assessment of $400. 

To date, excluding the funds received from TOP, he has paid $92.80. Per standard 

procedure, in an effort to collect on the court-ordered restitution and the special 

assessment, Nicoletti was placed into the Treasury Offset Program (TOP), whereby 

government funds owed him, such as tax refunds, were subjected to offset. Those 

monies were forwarded to the Clerk of the Court for payment of restitution and the 

1 See, Government’s Motion to Correct Clerical Error in Amended Judgment (ECR 

No. 214) Pursuant to Fed.R.Cr.P. 36 (ECF o. 225, PageID 3485-3489) 

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special assessment. On April 27, 2021 Nicoletti filed an emergency motion, 

complaining that he was wrongfully placed into the TOP, that his tax refund had 

been improperly sent to the Clerk of the Court, and that the refund should have gone, 

in large part, to his wife. Prior to receiving a response from the government, on 

April 30, 2021, the court entered an order directing the United States to return funds 

that had allegedly been recovered through the TOP (ECF 213), but thereafter, 

provided the government an opportunity to file a motion for reconsideration of that 

order. 

 On May 10, 2021 the government filed a motion for reconsideration, arguing 

that (1) the Clerk of the Court, not the Executive Branch, is holding the funds; (2) 

the Clerk must hold the funds for six months to prevent an inadvertent windfall to 

the defendant or his spouse; (3) because Nicoletti has claimed that the bulk of the 

funds being held by the Clerk are attributable to his wife’s earnings, she has the 

ability to recover that portion of the refund by way of an administrative claim with 

the Internal Revenue Service; (4) the portion of the refund not attributable to 

Nicoletti’s wife’s earnings should be applied to the $400 special assessment and the 

restitution; (5) the TOP is a mandatory statutory program for the administrative 

collection of debt due the United States; and (6) Nicoletti has not shown that he’s 

pursued the mandatory administrative review of his claim of wrongful offset. 

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 After the filing of that motion for reconsideration, the court issued an order 

directing the government to produce the Administrative Offset Notice informing 

Nicoletti that federal payments may be subject to offset or confirm that Nicoletti 

received notice. (ECF No. 230; PageID 3549) This is the government’s response to 

that order.

 The issuance of the Administrative Offset Notice is an automated process 

handled by personnel located in Washington DC. The notice is generated and mailed 

based upon information input by that unit. Attached as “Exhibit A” is a copy of the 

U.S. Department of Justice Administrative Offset Notice, which notice was mailed, 

first class, to Nicoletti’s trial counsel, James Howarth. Although it was not returned 

to the government, Howarth’s office has informed the U.S. Attorney’s Office that it 

has no record of receiving the notice. Moreover, by the time that the notice was sent, 

Howarth had withdrawn as Nicoletti’s counsel. 

 However, the local Financial Litigation Unit also sends a letter to defendant, 

or defendant’s retained counsel, after sentencing. Attached as “Exhibit B” is a copy 

of the letter, which letter was mailed, first class, to Nicoletti’s current counsel Paul 

Stablein on or about March 13, 2020. This letter was not returned to the government. 

The letter informs counsel that the government intends to enforce the collection of 

the restitution, including the potential offset of future income tax refunds. 

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 The appropriate remedy is not an order directing the Clerk to send the 

withheld funds to Nicoletti. Nicoletti received actual notice that the government 

intended to enforce the collection of the restitution, including but not limited to, the 

potential offset of future income tax refunds. On March 17, 2020 he filed his motion 

to amend the order of restitution to allow payment of restitution in installments. 

(ECF NO. 174, PageID 2770-2773) On July 1, 2020, pursuant to his request, the 

court entered an order requiring Nicoletti to immediately begin paying at least $168 

per month (10% of his gross monthly income) until he reports to the Bureau of 

Prisons. (ECF No. 187, PageID 3180-3185) However, Nicoletti failed to pay any of 

the installments until after the government offset his income tax refund. He tendered 

his first payment, of $46.40, on June 14, 2021. 

 Nicoletti’s challenge to the offset of his income tax refund should have been 

directed, in the first instance, to the United States Attorney. His failure to pursue his 

administrative remedies limits the Court’s ability to provide him with the relief he 

seeks. Bright v. United States Dep’t of Treasury 2018 U.S. Dist. LEXIS 174103 *3 

(W.D. Mo.) (relying on United States v. Beulke, 892 F. Supp. 2d 1176 (D. S.D. 2012) 

(before seeking redress in federal court, a person who wishes to challenge his or her 

referral to TOP must first exhaust administrative remedies) A court order directing 

the Clerk to return the withheld funds at this juncture, however, would elevate form 

over substance at the expense of the victims of his fraud. 

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 Finally, even if the court is disposed to evaluate Nicoletti’s objection to his 

placement into the TOP on the merits, it should require him to make some showing 

that retaining the offset funds for application against the funds he owes toward 

restitution is improper. 

SAIMA S. MOHSIN 

Acting United States Attorney 

By: s/Jacqueline M. Hotz 

Assistant U.S. Attorney 

211 W. Fort St., Ste. 2001 

Detroit, Michigan 48226 

Phone: (313) 226-9108 

Email: Jackie.Hotz@usdoj.gov

Mich Bar No.: P35219 

CERTIFICATE OF SERVICE

I certify that on July 27, 2021 I filed the foregoing United States Response to 

Order Requiring Supplemental Briefing with the Court’s electronic filing system, 

which system will send notice of the filing to all counsel of record. I further certify 

that on July 27, 2021 I mailed a copy of the foregoing document by first class mail 

to Paul Nicoletti, at his address of record. 

 s/ Jacqueline M. Hotz 

JACQUELINE M. HOTZ 

Email: Jackie.hotz@usdoj.gov

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