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State v. Cerasani

Supreme Court of Montana

January 7, 2014

STATE OF MONTANA, Plaintiff and Appellee,
v.
ANTHONY MICHAEL CERASANI, Defendant and Appellant.

Submitted on Briefs: October 30, 2013

APPEAL FROM District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DC-10-171 Honorable John W. Larson, Presiding Judge

For Appellant: Peter F. Lacny, Datsopoulos, MacDonald & Lind, P.C.

For Appellee: Timothy C. Fox, Montana Attorney General, Mardell Ployhar, Assistant Attorney General

Fred R. Van Valkenburg, Missoula County Attorney, Jennifer Clark, Deputy County Attorney

OPINION

Mike McGrath, Chief Justice

¶1 Anthony Cerasani appeals from the District Court's judgment dated November 27, 2012, imposing a restitution obligation of $164, 851.27 as a condition of a deferred sentence for the offense of felony theft. We affirm in part and reverse in part.

¶2 The issue on appeal is whether the District Court properly included restitution for the victims' tax liability as part of the amount Cerasani is required to repay.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 In 2007 Linda and Gerald Cintron hired Cerasani to build a house for them and the cost exceeded their original budget by $100, 000. In January 2008 Cerasani proposed that the Cintrons invest in a subdivision project that he said could double their investment and also allow them to pay off their debt on the new house. Cerasani proposed that they buy three 5-acre lots from him for a total of $480, 000, with a down payment of $180, 000. According to Cerasani's own expert who testified at the restitution hearing, Cerasani represented to the Cintrons that they "could make a 50% return in a short time" by re-selling the lots. The Cintrons decided to accept the deal based upon Cerasani's projections of large profits. Cerasani also represented that he owned the land and showed the Cintrons a warranty deed that transferred the property to him.

¶4 The Cintrons raised the $180, 000 down payment by cashing out all of their life savings retirement accounts that they had paid into for 25 years. While the Cintrons knew there would be tax consequences for them as a result of cashing out their retirement accounts, Cerasani's promises of large profits assured them that they could cover any tax liability. Because of the early-withdrawal tax consequences, they had to cash out substantially more from their retirement accounts than the $180, 000 they gave to Cerasani in order to net the $180, 000 for the land deal. In addition to income tax on the withdrawals, the Cintrons had to pay a federal excise tax on the "early distribution" that Cerasani's expert calculated to be $21, 366. The financial institutions withheld this amount from the distribution that the Cintrons took.

¶5 The Cintrons gave Cerasani $180, 000 and a promissory note for the balance of the purchase price. The Cintrons never received title to the land, and after investigation determined that Cerasani had title to the lots only briefly and had transferred title to a third party within minutes of when the property had been deeded to him. When confronted with the facts Cerasani made various excuses and claimed that he had deeded their property to a third person as a matter of routine real estate practices. The Cintrons told Cerasani that they needed either their money or the property to pay the substantial tax bill that arose from cashing out their retirement accounts. Despite promises to the contrary, Cerasani did not refund the Cintrons' money or transfer any property to them.

¶6 In early 2009 the Cintrons reported the incident to law enforcement, and in April 2010 the State charged Cerasani with felony theft by deception. After the theft charge was filed Cerasani returned $50, 000 of the Cintrons' $180, 000 investment. Cerasani and the State then entered a deferred prosecution agreement in which he promised to pay the Cintrons an additional $75, 000 immediately, and to make additional payments totaling slightly over $145, 000 within 15 months. He paid the $75, 000 but did not pay the remaining $145, 000.[1] Because Cerasani failed to complete the deferred prosecution agreement, the State re-opened the felony theft case. In June 2012 Cerasani signed a plea agreement. He agreed to enter a no contest plea to the felony theft charge in return for a six-year deferred sentence and a restitution obligation to be determined by the District Court.

ΒΆ7 The District Court held the restitution hearing in October 2012. Linda Cintron testified that they would never have withdrawn their retirement money if Cerasani had not shown them deeds to the lots, represented that he owned the property, and told them that they would make a substantial profit. She testified that they had to pay a penalty for withdrawing the retirement money before they were old enough to do so, and then had to pay taxes on the retirement money as ordinary income. The Cintrons acknowledged that they were aware of the tax consequences of cashing out their retirement accounts but believed that they could make more than enough profit on the land ...


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