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U.S. v. CITARELLI
February 25, 2002
UNITED STATES OF AMERICA
LOUIS J. CITARELLI, DEFENDANT.
The opinion of the court was delivered by: Stephen M. Orlofsky, United States District Judge.
The sentencing of Defendant, Louis J. Citarelli ("Citarelli"), presents
an unusual case in that Citarelli does not challenge the Probation
Department's calculation of his Total Offense Level, Criminal History
Category, or Sentencing Guideline Range. Rather, he strenuously objects
to any award of restitution to the victims of his crimes. Citarelli's
objections bring into sharp focus the important goals embodied in the
Victim and Witness Protection Act, 18 U.S.C. § 3663-64 ("VWPA") and
this Court's obligation to achieve them whenever possible. For the
reasons that follow, I am unmoved by Citarelli's vehement contention that
this Court should decline to calculate how restitution, if any, to his
former spouse, a victim of his fraudulent scheme, should be calculated,
because that calculation might require more extrapolation than would an
award of restitution for a crime involving a theft of a sum certain. I
conclude that I am compelled to order restitution here, despite any
potential "complication or prolongation of the sentencing process" because
of the circumstances of Citarelli's crimes, the harm suffered by the
victims of his crimes, and the purpose of an award of restitution under
On August 14, 1998, Citarelli pled guilty to Count One of a 32-Count
Indictment, which charged a violation of 18 U.S.C. § 371, Conspiracy
to Commit Bribery, and to a Three Count Information, which charged: (1) a
violation of 18 U.S.C. § 666 (Bribery) in Count One; (2) a violation
of 18 U.S.C. § 371 (Conspiracy to Commit Mail Fraud and Wire Fraud)
in Count Two; and, (3) a violation of 18 U.S.C. § 371 (Conspiracy to
Defraud the Internal Revenue Service) in Count Three. See Tr. of Plea
Allocution before The Honorable Stephen M. Orlofsky, United States v.
Louis J. Citarelli and Donato Marucci, Criminal Nos. 98-225-01,
98-225-02, of August 14, 1998.
Citarelli and his co-conspirator, Donato Marucci ("Marucci"), were
medical doctors practicing medicine as Franklin Medical Association,
P.A. ("FMA"), North Jersey Pain & Rehabilitation ("North Jersey Pain"),
Nutley Diagnostics ("Nutley"), and Mag-Dan Diagnostics ("Mag-Dan"). See
Pre-Sentence Report ("PSR") at ¶ 17. The relevant conduct underlying
crimes is grouped under two fraudulent schemes: (1) a bribery
scheme involving the City of Newark Board of Education, and its payment
of Workmen's Compensation benefits; and, (2) a scheme to defraud the
Internal Revenue Service, ("IRS"), the New Jersey Superior Court, and
Citarelli and Marucci's former spouses by underreporting income on their
federal tax returns and on the Case Information Statements ("CIS") they
filed with the Superior Court in their divorce proceedings.*fn1
The Workmen's Compensation Bribery Scheme
Citarelli and Marucci were approved Workmen's Compensation panel
doctors for the City of Newark Board of Education ("Board of
Education"), and, as such, were eligible to treat its employees who had
been injured on the job and receive payment for those services directly
from the Board of Education. Id. at ¶ 20. From August 5, 1993
through April 5, 1996, Citarelli and Marucci made 33 payments totaling
$65,088.41 to Louis Monaco ("Monaco"), a Workmen's Compensation
Coordinator, in exchange for Monaco's assistance in "steering" Workmen's
Compensation business from the Board of Education to their medical
practice and for assisting them in receiving payment. Id. at ¶¶ 21,
IRS Fraud and Divorce Fraud
In the summer of 1993, it became clear to Citarelli and Marucci that
their marriages were ending. In contemplation of the impending divorce
actions, they entered into an agreement with their accountant, Michael
Cortese ("Cortese"), to hide portions of their income and assets from
their wives. Id. at § 25.
Citarelli's wife, C.C., filed for divorce on October 5, 1993; Marucci's
wife filed for divorce on September 27, 1993. Id. at ¶¶ 27, 28.
Immediately thereafter, Citarelli and Marucci created the sham
corporation, Mag-Dan, through which they funneled earnings from their
medical practice, to conceal those assets from their wives and the
Superior Court. With the assistance of Cortese, Citarelli and Marucci
filed false CIS's with the Family Court which failed to disclose the
existence of Mag-Dan or any of the income that had been diverted to
Mag-Dan. Id. at ¶¶ 29-34. Cortese also assisted Citarelli and Marucci
in filing false individual tax returns and a corporate tax return for
Mag-Dan, all of which failed to portray accurately the ownership of
Mag-Dan and the true net worth of Citarelli and Marucci. Id. at 35-40.
In addition, Citarelli secreted $190,700 in cash and Marucci, $750,000 in
cash, in their respective homes. Id. at ¶¶ 25, 65, 66.
A judgment of divorce was entered in the Citarelli divorce proceeding
on November 14, 1995, pursuant to an agreement between the parties as to
alimony and equitable distribution. It is important to note, however,
that Citarelli's former spouse, C.C., consummated the agreement which
resolved the divorce and the Family Court approved that agreement unaware
of the assets that had been diverted to and concealed in Mag-Dan. Id. at
¶¶ 41-42. A judgment of divorce in the Marucci proceeding was entered
on January 17, 1996, pursuant to an agreement between Marucci
former spouse as to alimony, equitable distribution, and child support.
Again, neither Marucci's wife nor the Family Court was aware of the funds
which had been diverted to and concealed in Mag-Dan when the agreement
was negotiated by the parties and approved by the Court. Id. at ¶
44. After the divorce judgments were entered, Cortese advised Citarelli
and Marucci as to how and when to return the diverted funds from the sham
Mag-Dan account to their personal accounts. Id. at ¶ 45. The total
amount of money which Citarelli and Marucci diverted was calculated to be
$1,925,039.56. Id. at ¶ 50. Citarelli avoided payment of $260,264
in personal income tax and conspired to evade corporate taxes of
$206,296, for a total of $466,560 in evaded income tax. Id. at ¶
63. Marucci is responsible for $485,674 in evaded income tax. Id. at
The Sentencing Guidelines Calculation
The Probation Department has determined that the Total Offense Level
for Citarelli's crimes is 21 and that his Criminal History Category is
I. Citarelli has not objected to the Sentencing Guidelines calculation.
Pursuant to the 1995 Sentencing Guidelines which have been used in this
case, this results in a Sentencing Guideline Range of 37 to 46 months.
The Government has filed a motion pursuant to § 5K1.1 of the
Sentencing Guidelines seeking a downward departure because of Citarelli's
substantial assistance in the Government's investigation and prosecution
of other persons who committed offenses. Citarelli has not moved for a
downward departure, but has submitted a substantial number of letters
from family, friends, and business associates attesting to his good
I shall not address the Government's motion for a downward departure at
this time, but shall defer a ruling on that motion to the sentencing
hearing. I now turn to the question of restitution under the VWPA.
Pursuant to the VWPA, which is incorporated into the Sentencing
Guidelines by § 5E1.1, a sentencing court may order a criminal to
make restitution to any victim of his offense. See United States v.
Maurello, 76 F.3d 1304, 1316 (3d Cir. 1996); 18 U.S.C. § ...
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