Thursday, June 20, 2013
Panel Calls Embezzlement Victim’s Claim Premature
By a MetNews Staff Writer
An effort by a company that lost more than $700,000 to the embezzling owner of a Las Vegas payroll-services business to recover restitution from the owner’s forfeited assets is premature, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The panel denied a petition for writ of mandamus brought by Stake Center Locating, Inc. after a district judge denied, without prejudice, its petition for a restitution order against Deborah A. DiFrancesco. The company asked the judge to direct the U.S. attorney and the IRS to assist it in obtaining restitution.
The Las Vegas Sun reported last month that DiFrancesco was likely to draw a sentence of at least five years after her guilty plea to charges she took more than $3.3 million from her customers. She pled guilty to one count of tax evasion and three counts of wire fraud, admitting that she had evaded payment of $3.8 million in taxes, penalties and interest.
She admitted that she would obtain money from her clients to pay their taxes, but understated the amounts due in filings with the government, then pocket the difference.
DiFrancesco was able to hide the fraud through a combination of a growing client base, a growing tax base associated with growing payrolls, late filings and paying past liabilities with current client deposits. But as the economy slowed, so did her business, the Sun reported.
She was driven out of business, then arrested, as a result of an independent audit on behalf of a union local that was one of her clients and discovered it owed more than $673,000 in taxes. She said she had spent the money gambling and on other personal expenses.
DiFrancesco agreed to pay restitution of $3,823,544 to her client victims—including $763,846 to Stake Center, which objected to the plea agreement—and $1,128,505 in back taxes on embezzled funds. She is set to be sentenced in September.
In a per curiam opinion, Judges Paul Watford and Ronald Gould and Senior Judge Michael Daly Hawkins of the Ninth Circuit said Stake Center’s petition under the Crime Victims Restitution Act will not be ripe for adjudication until the defendant is sentenced.
By statute, the judges explained, restitution must be provided for “when sentencing a defendant.” And there will be no harm to Stake Center, the panel added, because the district judge invited the company to renew its motion when DiFrancesco is sentenced.
In a concurring opinion, Hawkins explained that while he agreed that the petition was premature, he doubted that Stake Center can prevail on the merits now that the defendant does not have the assets from which it seeks to obtain recompense. “Absent authority to order the seizure of assets from, or criminal forfeiture against, third
parties, this court simply cannot grant the relief Petitioner seeks,” Hawkins wrote.
The case is In re Stake Center Locating, Inc., 13-72062.
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