NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 12a0704n.06 Nos. 10-4483, 10-4552 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT UNITED STAT ES O F AMERICA,
P laintif f-App ellant/Cross-Appellee,

v. SAMUEL R. CICCOLINI,
D e f e n d a n t - A p p e l l e e / C r o s s - A p p e l l a n t . ) ) ) ) ) ) ) ) ) ) ON AP P EAL F ROM THE UNIT ED S TATES DISTRICT COURT F OR TH E NORTHERN DISTRICT O F OHIO

Before: SILER and WHITE , Circuit Judges; REEVES, District Judge. *
DANNY C. REEVES , District Judge. Samuel C i cc olini pleade d g uilty to one count of structuring financ i al transac tions to evade repor ting require ments and one count of making and subscribing a false t ax re turn. He was sentenc ed to one day of incar cer ation, three y ear s of supervised rele ase , and a $350,000 fine. I n addition, the district court order ed Ciccolini to pay $3,500,000 in restitution to a char itable foundation that the district court believed had been harme d by his crimes. Both parties appea led, contending that the restitution order was unlawful beca use the district court lacke d authority to impose it. We ag ree . As a result, Ciccolini’s s en t en ce wi ll be

vacated and the ma

tter will be re manded f

or re sentenc ing.

T h e Honora

ble Danny C. Reeve s, United States District J udg e for the Easter n Dist ri ct o f * Kentucky , sitti ng by

desig nation. 1Nos. 10-4483, 10-4552

United States v. Ciccolini I

. Ciccolini is an ordaine d Catholic priest and the former direc tor of the I nterva l Br otherhood Home, a drug and alcohol reha bilitation fac ility that he founded i n Akron, Ohio. He was also the president of the I nterva l Br otherhood Home Founda tion, I nc. (“the Founda tion”), which was established in 1988 to raise funds for the I nterva l Br otherhood Home. The chari t i es we re h ighly

succe ssful, serving thousands of people and acc umulating assets of approximately $13,600,000 by October 2010.
Be tween April and J une 2003, Ciccolini deposit ed $ 1 , 0 3 8,680 in his bank acc ounts by making 139 separ ate deposits of less than $10,000 eac h. Ciccolini admitted that these deposits wer e
structure d so as to avoid curr ency repor ting require ments. He also admitted filing false tax returns for tax y ear s 2 0 0 2 t o 2 0 0 6 , leaving a total of $292,136 in unpaid taxes. His explanation for the

source of the struc tured funds w as that for thirty -three y ear s he had “ hoarde d, acc umulated salary , g ift s , persona l donations, contributions, [and] bequests.” The unrepor ted income, howeve r, consi sted of money Ciccolini had embezzled from the Founda tion. After admittin g t h e embezzlement to the Foundation, he r epaid the a pproxi mately

$1,300,000 that he had taken. Ciccolini was char g ed in an information with one count of structuring financ ial transac tions
to evade repor

ting require ments in violation of 31 U.S.C. § 5324(a) (3), and one count of making and

s u b s cr i b i n g a false tax return in violation of 26 U.S.C. § 7206(1). Neither offe nse was alleg ed to have involved the proce eds of illega l activity

. Ciccolini pleade d g uilty to both char g es pursuant to

a plea ag ree ment. Prior to his g uilty plea, Ciccolini paid $292,136 to the I nterna l Revenue Service

as re stitut ion relating to the tax charg e. 2Nos. 10-4483, 10-4552

United States v. Ciccolini During the s en t en ci ng hear ing, the district court addre ssed the parties’ objections to the
Presentenc e I nvestig ation Report (PSR), then calc ulated Ciccolini’s total offe nse level and criminal history under the sentenc ing g uidel i n es. The district court’s g uideline calc ulations differ ed signific antly from those of the probation office r, who had rec om m ended a g uideline rang e of eig hteen to twenty -four months based on a total offe nse level of 15. Be cause the district court found that Ciccol i n i h ad testified falsely during his plea colloquy reg arding the source of the structure d funds, it denied any adjustment for acc eptanc e o f r e s p onsibili ty and applied a two-leve l enhanc ement for obstruc tion of justice. The dist rict court also deter mined that the funds used in the struc turing offe nse wer e the proce eds of illega l activity , justify ing a six teen- level enhanc ement on that count. Finally , the district court applied a two-leve l incre ase to the tax count based on its finding that Ciccolini’s unrepor

ted income was derive d from criminal activity

. The resulting total offe nse level of 26 (as amende d at the sentenc ing hear ing) , combined with Cicc olini’s c riminal history cate g ory of I , y ielded a g uideline ra ng e of sixty -three to seventy -eig ht months of imprisonm ent. The district court next turned to the sentenc ing fac tors s et forth in 18 U.S.C. § 3553(a)

. Emphasizing the need for Ciccolini’s sentenc e to serve the purpose of g ener al deter renc e, the judge explained:
I am influence d in this at least in pa rt by cer tain writing s made by a Nobel-w inning economist by the name of Be cker who wrote on criminal punishment, and he sug g ests or arg ues that in circ umstances such as financ ial transac tions like this, that incar cer ation is less important than providing a disincentive to others and that the disincentive ca

n sometimes be obtained throug h financ ial penalties. So I think the se ntence I ’m g oing to impose today is g oing to se rve those purposes.

3Nos. 10-4483, 10-4552

United States v. Ciccolini Shortly there afte r, t he cour t raised “ the issue of re stitut ion,” which it i ndicated would “be a m ajor fac tor in” Ciccolini’s sentenc e. I do find that there is some split of authority , but Congr ess ch an ged the restitution laws, and I think that they chang ed it in major eff ort to try to broade n the availability of restitution for conduct to aff ord an ability to impose restitution that harms another proxi mately

as a r esult of the commission of the off ense. And in this case I think the Foundation has been proxi mately harme d by the commission of y our off

ense.

. . . .

. . . . I still think the broad, broad majority of the additional monies that y ou have are monies that were embezzled from the Foundation in one fashion or a nother.

. . . . So embezzlement, I ’m g oing to seek to impose an order that imposes restitution upon y ou and re quires y ou to transfe r monies bac k to the Founda tion. The district court order ed Cicco l i n i t o make restitution to the Founda tion in the sum of $3,500,000, war

ning tha t if he failed to comply with the restitut ion order, he would “be subje ct to b ei n g s en t d i re ctly to prison.” Ciccolini was also sentenc ed to one day of incar cer ation on eac h count, to be ser

ved concur

rently , followed by a thre e-y ear term of supe rvised re lease . I n addition, the district court imposed a $350,000 fine ($250,000 on the structuring count and $100,000 on the tax count). The United States objec ted to the leng th of incar cer ation. Following the s en t en cing hear ing, the district court issued a sentenc ing memorandum “to provide a thoroug h explanation of it s sentenc e of Def endant Samuel R. Ciccolini.” I n the memorandum, the district court fo und that Ciccolini’s “vast wea lth” — almost $5.6 milli on, including a $5 milli on trust a ccount — could not ha ve been acc umulated by leg itimate me ans. By the di strict cou rt ’s calc ulations, Ciccolini was “unable to leg itimately acc ount for” approximately 4Nos. 10-4483, 10-4552

United States v. Ciccolini $4,500,000. The district court conclude d that Ciccolini had embezzled at least $4,000,000 from the Founda tion in addition t o the $1,300,000 he a dmitted to having take n. The memorandum al s o expanded upon the di strict court’s earlier discussion of t he § 3553 fac tors. Wit h respe ct to available sentenc es, the district court decla red that, in addition to the fines authorized for eac h count, it could “orde r an awa rd of restitution, per 18 U.S.C. § 3663, to the victims of the offe nse conduct.” The court reiter ated its relianc e on Be cker ’s views conce rning
g ener al deter

renc e: I n cra fting a punishment that will most adeq uately deter simil ar conduct by other individuals in the future, the Court is influence d by th e wr i t ings of Nobel Priz e winning economist Gar

y Be cke r. I n his seminal article on crime and punishment, Professor Be cker rec ommends more emphasis on fines — and less on incar cer ation

— for many white-c ollar or financ ial o ffenses. Be cker theorizes that in financ ial crimes the incar cer ation of the specific offe nder is less i m p o rtant than providing a disincentive to future offen d er s throug h financ ial penalties. The Court g ener ally ag ree s with those propositions and finds them persua sive here

. Wit h Be cker ’s theory in mind, the Court f

inds that imposing a financ ial penalty in the curr ent case , rathe r than prison time, will adequate ly deter future f inancial c rime. “Relate d to using a financ ial penalty to serve as a g ener al deter rent,” the district court continued, “is the nee d to impose restitution t o the victims of the offe nse.” The next sever al pag es of the sentenc ing memorandum addre ssed whether the district court could orde r re stitut ion to the Foundation. The district c ourt acknow ledg ed that it ha d no power to order restitution without statutory authority , then quoted § 3663 as foll o ws : “U n d er 18 U.S.C. § 3663(a) , a cour

t, ‘when se ntencing a def endant c onvicted of a

n offe nse[,] . . . may

order . . . that the defe ndant make restitution to any victim of such offe nse.’” The que stion ra ised by the statute, in the district court’s view, was whether the Founda tion qualified as a “victim” under the lang uag e

5Nos. 10-4483, 10-4552

United States v. Ciccolini of the restitution statute. The district court determined that it was, “bec ause the Home and Founda tion wer e proxi mately harme d by Ciccolini’s scheme to embezzl e, o f wh ich the char g ed conduct was a part.” After examining sever al case s in which restitution was found to be proper , the district court conclude d that prec edent from the Six th Circuit and elsewhe re “allows for a restitution order that takes the Def

endant’ s entire criminal conduct into acc ount wher e non-cha rg ed conduct is closely rela t ed t o the char g ed conduct.” Requiring Ciccolini to pay restitution, the district court found, would “ser

ve[] the dual purpose of g ener al deter renc e under § 3553(a) (2)

. . . and also serve [] the purpose of providing restitution to the v i ct i ms of the offe nse conduct under 18 U.S.C. § 3553(a) (7).” The United States appea led, arg uing that Ciccolini’s entire sentenc e must be vacated and the

case rema nded for rese ntencing

. Ciccolini ag ree s in his cross-a ppeal that the restitution order should be vac ated. He maintains, howeve r, that the re mainder of his sentence should be aff irmed.
I I

. As the district court corr ectly observe d, fede ral courts possess “no inhere nt power to awa rd restitution.” United States v. Eve rs , 669 F.3d 645, 655 (6th Cir. 2012) (citation and quotation marks omitted). Thus, restitution may be order ed “only when and to the extent authorized by statute.” Id.
We consider de novo whether such statutory authority exis ts. United States v. Elson , 577 F.3d 713, 720 (6th Cir. 2009). The Vic tim and Witness Protection Act (VWPA), 18 U.S.C. § 3663, g overns restitution in criminal ca ses. I t provides that a c ourt,

6Nos. 10-4483, 10-4552

United States v. Ciccolini when sentenc ing a defe ndant convicted of an offe nse under [t itle 18], sect i o n 401, 408(a) , 409, 416, 420, o r 4 2 2 (a ) of t he C ontrolled Substances Act (21 U.S .C. 841, 848(a) , 849, 856, 861, 863)

. . . , or section 5124, 46312, 46502, or 46504 of title 49, other than an offe nse descr ibed in section 3663A(c ), may order , in addition to or, in the case of a misdemeanor, in lieu of any other penalty authorized by law, that t h e defe ndant make restitution to any victim of such offe nse, or if the victim is dece ased, to the victim’s estate. The court may also order , if ag ree d to by the parties in a plea ag ree ment, restitution to persons other than the vic tim of the offe nse. 18 U.S.C. § 3663(a) (1)( A). Thus, the dist r ic t c o u rt’s selec tive quotation notwithstanding, subsection (a) (1)( A) authorizes restitution order s only in cer tain ty pes of criminal case s. The VWPA also permits an orde r of r estitution “in any criminal ca se to the ex tent ag ree d to by the par ties in a plea
ag ree ment.” 18 U.S.C. § 3663(a) (3). The restitution awa

rd was impermissible in this case . Despite the district court’s relianc e on § 3663(a) , Ciccolini was not convicted under any of the statutes listed in that section. See 18 U.S.C. § 3663(a) (1)( A); see also United St a t es v. Butler , 297 F.3d 505, 518 (6th Cir. 2002) (noting that § 3663(a) (1) “does not apply to Title 26 offense s”). L ikewise, Ci ccolini’s plea ag ree ment did not contain a provision for p ay ment of restitut ion bey ond the amount he had alre ady paid t o the I RS. See 18 U.S.C. § 3663(a) (3). I n short, the court had no leg al auth o ri t y t o order restitution to the Founda tion. Consequently , that portion of Ciccolini’s sentenc e must be vacated. See United States v. Edkins , 421 F. App’x 511, 518 (6th Cir. 2010) (“Be cause Edkins pleade d g uilty to violating 26 U.S.C. § 7201 — an offe nse to which the VWPA does not apply — the co u rt l ac k ed authority to order VWPA restitution.

. . . I n the absenc e of statutory authority for this restitution order , we vacate that portion of the sente nce.” ).

7Nos. 10-4483, 10-4552

United States v. Ciccolini Additionally , beca

use the re stitut ion order w as an integ ral pa rt of Ciccolini’s sentenc e, the

rema inder of his sentenc e cannot stand. As t he Supreme Court explained rec ently , “‘[a] criminal
sentenc e is a packa g e of sanctions that the district court utiliz es to eff ectua te its sentenc ing intent.’” Peppe r v. United States , 131 S. Ct. 1 2 2 9 , 1 2 5 1 (2 011) (quoting United States v. Stinson , 97 F.3d 466, 469 (11th Cir. 1996) (per curia m ))

. S i n ce that intent “may be undermined by altering one portion of the calc ulus, an appellate court when reve rsing one part of a defe ndant’s sentenc e m ay

vacate the entire sentenc e . . . so that, on rema nd, the trial court can rec o n fi gu re t h e s entencing plan

. . . to satisfy the sentenc ing fac tors in 1 8 U. S

. C

. § 3553(a) .” Id. (omissions in orig inal) (citations and inter

nal quotation marks omitted).
Her e, the district court considered Ciccolini’s offe nses t o be ver y serious, as evidenc ed by the fac t that it calc ulated a signific antly highe r g uideline rang e than that rec ommended in the PSR

. There is no doubt that the restitution order was the core of Ciccolini’s sentenc e based on the district

co u rt s tatements during the sentenc ing hear ing. Under these circ umstances, vaca ting only th e restitution order would c lear ly undermine the district court’s sente ncing intent. See id.

I I I

. For the fore g oing rea sons, we vacate Ciccolini’s sentenc e and rema nd the case so that a new
sentenc ing he aring may

be conduc ted de novo.

8