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United States v. Termini

United States District Court, D. Connecticut

January 15, 2016




Between August and November 2007, the defendants, Fred Dalicandro and Raymond Termini, defrauded Omega Health Care Investors, Inc. ("Omega").[1] The fraud occurred in connection with Termini‘s position as chief executive officer and managing member of Haven Healthcare ("Haven"), and Dalicandro‘s position as Director of Cash Management for Haven.

Haven operated several nursing homes throughout Connecticut, including two owned by Omega-Haven Health Center of Jewett City and Haven Health Center of Soundview. During 2006 and 2007, the State of Connecticut mandated that nursing homes install fire sprinklers, and thus, in fall 2007, Omega agreed to provide up to $2 million for Haven to make sprinkler improvements in the Jewett City and Soundview facilities. The funding was to be recouped by an increase in base rent that Haven paid to Omega.

On October 2, 2007, Omega wired $418, 480 to the Jewett City residence, and $537, 610 to the Soundview residence (for a total of $956, 090), as reimbursement for various invoices that turned out to be false or misleading. Rather than being used for the actual costs of sprinkler systems in those two residences, that money was put into Haven‘s operating accounts, and on October 31, 2007, was used to pay part of over $2.1 million in provider taxes Haven owed the State of Connecticut. Haven filed for bankruptcy in November 2007 and had substantially no assets by June or July 2008. In July 2008, Omega entered into a lease with a different company-TC Healthcare I, LLC ("TC Healthcare")-to operate the Soundview and Jewett City facilities.

Termini pled guilty to conspiracy to commit wire fraud in violation of 18 U.S.C. § 371 and wire fraud in violation of 18 U.S.C. § 1343. Dalicandro pled guilty to wire fraud in violation of 18 U.S.C. § 1343. Termini was sentenced to a year and a day of imprisonment and three years of supervised release, in addition to a $6, 000 fine. Because restitution is mandatory by statute but appeared potentially complex in this case, it was not immediately ordered but instead the criminal judgment included a restitution provision as follows: "Restitution: A restitution order will issue." Dalicandro was sentenced to pay a $2, 500 fine and his criminal judgment provided as follows: "Restitution: A written order will issue following a hearing on October 8, 2010." Several hearings on the matter of restitution were held, in May and October 2010 and August 2011, and additional briefing was submitted. It recently came to my attention, however, that no order issued, and I therefore held a conference with counsel for both defendants and the government to discuss the matter. I invited briefing on the question whether the court retains authority to issue restitution orders after such a delay, and supplemental briefs were submitted on August 13, 2015.

I conclude that the court does retain authority, and my ruling and order on restitution follows.

I. Discussion

A. Authority to Order Restitution

Under the Mandatory Victims Restitution Act of 1996 ("MVRA"), an order of restitution should be entered within 90 days of sentencing. 18 U.S.C. § 3664(d)(5). The Second Circuit has repeatedly made clear that failure to order restitution within 90 days will not prevent entry of a restitution order so long as the error is harmless. See, e.g., United States v. Zakhary, 357 F.3d 186, 191 (2d Cir. 2004) (declining to reverse a restitution order despite "a district court‘s failure to determine identifiable victims‘ losses within ninety days . . . unless [the defendant] can show actual prejudice from the omission"); United States v. Catoggio, 326 F.3d 323, 329-30 (2d Cir. 2003) (applying same rule). More recently, the Supreme Court came to a similar conclusion, holding that "a sentencing court that misses the 90-day deadline nonetheless retains the power to order restitution—at least where, as here, the sentencing court made clear prior to the deadline‘s expiration that it would order restitution, leaving open (for more than 90 days) only the amount." Dolan v. United States, 560 U.S. 605, 608 (2010). See also United States v. Gushlak, 728 F.3d 184, 191-92 (2d Cir. 2013), cert. denied, 134 S.Ct. 1528 (2014) (discussing Dolan and applying the Second Circuit‘s harmless-error analysis).

Despite the longer delay here, those cases control. Both criminal judgments indicate that a written restitution order would follow, and the parties continued to brief and argue issues relating to restitution at multiple hearings. Additionally, the plea agreements and presentence reports indicated that restitution was mandatory by statute and would be imposed. The defendants were clearly on notice, and they have offered no argument that they were prejudiced by the delay-indeed, in light of the time value of money, the delay was likely only to their advantage. Moreover, as the Supreme Court noted in Dolan, defendants who face potential prejudice from a delay can alert the court, or, in an extreme case, seek mandamus, 560 U.S. at 616-17, and the defendants did neither in this case.

Termini argues that the delay violates his due process rights. There is no doubt that prompt sentencing implicates due process, United States v. Ray, 578 F.3d 184, 199-200 (2d Cir. 2009), but it is not clear whether the delayed entry of a restitution order-which the defendant was told would be forthcoming when a sentence was otherwise timely imposed-implicates his rights in the same way. Even assuming that it does, the defendant would still need to show actual prejudice that is both "substantial and demonstrable, " id. at 200, and, as I stated above, Termini has not done so, because there appears to be no prejudice.

In his supplemental brief, Dalicandro also argues that the issues of restitution in this case are too complex for determination. It is true that, by statute, mandatory restitution does not apply when "determining complex issues of fact related to the cause or amount of the victim‘s losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim is outweighed by the burden on the sentencing process, " 18 U.S.C. § 3663A(c)(3)(B), but those circumstances are not present here. Restitution in this case is not especially simple, as the length of this ruling suggests, but neither is it sufficiently burdensome on the sentencing process to outweigh the need to provide restitution to the victim, especially when compared with the complexity of other cases in which restitution was ordered.

Finally, both defendants argue that they cannot afford to pay restitution, but that fact is not sufficient to avoid entry of a restitution order. 18 U.S.C. § 3664(f)(1)(A) ("In each order of restitution, the court shall order to restitution to each victim in the full amount of each victim‘s losses as determined by the court without consideration of the economic circumstances of the defendant.").

B. The Court May Subtract Benefits Given to the Victim from Restitution Owed by the Defendant

The MVRA requires a district court to order restitution to victims of specified offenses. Mandatory restitution "shall apply in all sentencing proceedings for . . . plea agreements relating to charges, for any . . . offense against property . . . including any offense committed by fraud or deceit." 18 U.S.C. § 3663A(c)(1)(A)(ii). Because they have pled guilty to wire fraud and conspiracy to commit wire fraud, Termini and Dalicandro are required to pay restitution to their victim(s).

For the purposes of the MVRA, a victim is defined as

[A] person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant‘s criminal conduct in the course of the scheme, conspiracy, or pattern.

18 U.S.C. § 3663A(a)(2). Omega is therefore a "victim" under the MVRA.

The court must "order restitution to each victim in the full amount of each victim‘s losses as determined by the court." 18 U.S.C. § 3664(f)(1)(A). A court has no discretion to order restitution for anything less than the full amount of the loss. United States v. Walker, 353 F.3d 130, 133 (2d Cir. 2003). A court shall, however, subtract from the amount lost "the value (as of the date the property is returned) of any part of the property that is returned." 18 U.S.C. § 3663A(b)(1)(B)(ii).

The purpose of the MVRA is to make the victim whole again. United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006). A sentencing court therefore may not order restitution that exceeds the victim‘s actual losses. Id. at 117; see ...

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