Smurfing, Structuring, Sentencing for Father Sam--An Update

Rick Armon at Ohio.com (Akron Beacon-Journal) has this compelling update on the Father Sam Ciccolini story.  Perhaps you recall the original Bad Lawyer story about Father Sam.  This is a tantalizing tale involving a beloved greater Akron cleric who was caught "structuring."  Structuring aka smurfing is the intentional parceling of large deposits in smaller transactions to avoid reporting or other financial regulation or requirement. Structuring is one of the ways money from ill-gotten gains is "laundered." 

With that introduction let's look at what the AUSA says Father Sam did, and what his lawyers say was the reason he was smurfing:

"The Rev. Samuel Ciccolini embezzled more than $1 million from the Interval Brotherhood Home Foundation through an elaborate scheme that involved falsifying invoices and financial records, federal authorities say. The well-known Catholic priest better known as 'Father Sam' confessed to the nonprofit and paid back the money only after authorities launched an investigation into his conduct, according to a 14-page document filed Tuesday in federal court.

The document contains details never revealed before in the case, including the amount stolen and how Ciccolini deceived the nonprofit by billing the Interval Brotherhood Home Foundation for construction work and equipment that had been donated.  'The community held him in high regard and had a tremendous amount of faith and trust in him,' Assistant U.S. Attorney Robert Bulford wrote. 'He used all of this goodwill to take advantage of the situation and embezzled funds from the charity.  The scheme was an elaborate subterfuge. There was deception at all levels along the way. He falsified invoices. He falsified financial records. He issued false checks of the not-for-profit.'

Ciccolini, 68, who founded the Interval Brotherhood Home in 1970 and served as its executive director, is scheduled to be sentenced Friday in federal court in Cleveland on income tax and bank-related charges.

A plea agreement recommends 18 to 24 months in prison, although his attorneys have asked for only house arrest given his career of helping others and cooperation with authorities. 

[Fr. Ciccolini] has not been charged with theft. [ . . . ]

As part of his scheme, Ciccolini recorded fictitious expenses for construction work and equipment that had been donated at no cost to the nonprofit, the court filing says. He then issued checks for the work and equipment, and kept the money himself, it says. 'These payments did not go to the contractors as indicated in the books and records of the foundation,'  Bulford wrote. 'Instead, they were converted by Samuel Ciccolini into cash and official bank checks which were deposited in Ciccolini's accounts.'

Between 2002 and 2006, the priest deposited more than $900,000 into his personal accounts, the court filing says. Ciccolini confessed to the board that he took about $1.2 million, the document says.  It's unclear what the priest did with the money. In typical embezzlement cases, people spend it but he apparently kept the cash on hand because he was able to pay it back to the foundation, Bulford said.

But Ciccolini, better known as 'Father Sam,' has since repaid the money he took, attorneys Peter Cahoon and Gregory Plesich wrote in an 11-page brief filed last week in federal court in Cleveland.  The [pre-sentence statement submitted by Cicciolini's attorneys] says the soft-spoken, 68-year-old priest from Akron 'improperly transferred funds' from the foundation to his personal accounts. It doesn't identify the amount involved.

Ciccolini stepped aside as executive director of IBH after he was charged earlier this year with federal income tax and bank-related crimes. He is scheduled to be sentenced Friday.  At the time he was charged, IBH officials said the case involved Ciccolini's personal finances and didn't involve the nonprofit group.  Ed Stanford, current executive director of IBH, and Tom Killian, president of the foundation, declined Monday to explain those previous misleading statements.

Cahoon and Plesich wrote: '[Ciccolini] believes that he inappropriately transferred these funds based on an incorrect state of mind that it was his own goodwill which generated donation of construction materials and services to IBH and that this somehow justified his taking personal control of the savings . . . so he could personally control the disposition of these funds as he saw fit.  'Being always concerned about IBH and its funding, and wanting to have IBH grow and turn into an international facility, Sam wanted to be able to control how funds would be used.'

Ciccolini paid for an audit of foundation finances and has repaid money that he took, the document says.  In the court filing, Cahoon and Plesich also requested that federal Judge James Gwin sentence the priest to house arrest instead of prison. 

Ciccolini pleaded guilty in July as part of a plea agreement with prosecutors that could bring a prison sentence of 18 to 24 months.  The [pre-sentence statement by his lawyers] paints Ciccolini as a saintly figure whose career of helping others has been tainted only by his financial missteps.

Cahoon and Plesich said his impeccable background and cooperation with authorities should prevent him from going to federal prison. Instead, he should be placed under home confinement with work release and be allowed to continue serving the community, they said.  'His life has been dedicated to helping others, in selfless and tireless ways,' Cahoon and Plesich wrote. 'Even now, Sam works a very high number of hours every day at IBH and his local parish. He gives of himself without complaint. This is his calling, and his vocation. There is nothing else he would rather do.'

Process takes toll

The document, which does not mention how long he should be under house arrest, also says Ciccolini 'has been embarrassed and publicly humiliated'' and ''this process has taken a mental and physical toll on him.'

Assistant U.S. Attorney Robert Bulford Jr. said federal prosecutors will seek an 18- to 24-month sentence as outlined in the plea deal. He declined further comment, saying he would file his own brief with the court in advance of the sentencing.

Ciccolini built an international reputation for his outreach and treatment of alcoholics and drug addicts at the Interval Brotherhood Home, located on a sprawling campus in Coventry Township [near Akron.] He founded the facility on Oct. 7, 1970, in an abandoned Carmelite monastery and served as its executive director until he was charged. [. . . ]  Ciccolini [ . . .] pleaded guilty to one count of structuring financial transactions to evade reporting requirements and one count of making and subscribing a false tax return.  He deposited more than $1 million in bank branches in the Akron area from April to June 2003 by making 139 cash transactions, federal authorities say.

Banks are required to report deposits of more than $10,000 to federal authorities under the Bank Secrecy Act, which is designed to catch money laundering. Ciccolini deposited lower amounts to avoid the reporting requirement.

Explanation for actions

In the court filing, Cahoon and Plesich tried to provide an explanation for the priest's financial crimes[:]

'Sam did not want to have to explain to the Internal Revenue Service or anyone else where the cash came from,' Cahoon and Plesich wrote. 'Nor did he want the public to think that he or IBH had a lot of money. Sam has always been a very private person when it comes to his own money, and he was inappropriately secretive when it came to these deposits.'

Ciccolini also filed a tax return in 2004 listing his income for the previous year as $101,064 when it was $407,062. Although he faced only one income tax charge, he has admitted other years' returns also were incorrect.  By 2003, the priest, who has no real expenses, had accumulated at least $1.6 million in personal wealth through gifts, bequests, his salary from the nonprofit and a $230,000 life insurance policy when his mother passed away, according to the court filing.

Ciccolini, whose father died at 41, grew up poor and felt responsible for the welfare of family members, the court filing says. As a young man, he would save money in a cigar box and hoard cash — a pattern that continued into adulthood.  In early 2003, he panicked after hearing a report that the United States was going to change the form of currency and decided to put his money in the bank, leading to the restructuring charge.
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As you might imagine I strongly identify with Father Ciccolini, going through precisely the same process "that's taking a toll" on him--except no one has ever accused me of being "Saintly." 

When I first read about Father Sam's case I guessed incorrectly that he was "structuring" money for crooks, since he has long been employed by, croo . . . the Diocese of Cleveland, Ohio.  It's more likely that years of working with alcoholics and drug addicts affected Father Sam's personality and judgment.  As I said many times in connection with Catholic priests caught in the sex abuse scandals, these are pretty naive men.  This naivete extends to all the things the rest of us are expected to do in our real world.  As the article notes, Priests don't have "expenses."  I can easily understand how Father Sam got "sideways."  I got sideways, working with victims of clergy sex abuse and incest--I believed incorrectly that my "work" was more important than my obligations to the state and federal laws and ultimately my family.

I hope Father Sam is shown mercy, I was.