Case 3:23-cr-00004-VAB Document 19 Filed 06/17/23 Page 1 of 15

UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

UNITED STATES OF AMERICA : No. 3:23CR4 (VAB)

:
v. :
:
MELISSA PEZZOLO : June 16, 2023

SENTENCING MEMORANDUM

This Memorandum is submitted in aid of the sentencing of the defendant, Melissa Pezzolo,

which is presently scheduled for June 27, 2023, and in response to the defendant’s Sentencing

Memorandum filed on June 12, 2023 (Dkt. No. 17) (“Defendant’s Memorandum”).

I. BACKGROUND

A. Offense Conduct

The basic and uncontested facts of this offense are summarized at paragraphs 6-20 of the

Presentence Report (“PSR”). See Dkt. No. 12. As the PSR notes, its recitation of offense

conduct is drawn from the information contained in the Information as well as the Stipulation of

Offense Conduct and Relevant Conduct appended to the parties’ plea agreement. Id. ¶ 6.

In summary, as set forth therein, Ms. Pezzolo used her position as the office manager and

bookkeeper for Bethel-based nursery Miracle Farms to perpetuate a tax fraud, in which she

willfully failed to file any employment tax returns (Forms 941) or make any payment of

withholding taxes on behalf of Miracle Farms between 2014 and 2018. Id. ¶¶ 7-14. Ms. Pezzolo

continued to issue annual Forms W-2 to Miracle Farms employees and distribute paychecks that

withheld employees’ income and FICA taxes. Id. ¶ 14. Nonetheless, Ms. Pezzolo failed to pay

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over the related withholding taxes for the business’ employees (or herself) to the Internal Revenue

Service or Social Security Administration. Id. ¶¶ 14-15. In particular, she failed to pay over

either the purportedly withheld employee share or the employer’s share of the FICA taxes. Id.

In total, this amounted to approximately $1,170,992 in unpaid withholding taxes. Id. ¶ 16.

Additionally, from 2014 through 2018, Ms. Pezzolo effectively embezzled money from

her employer Miracle Farms and then failed to file a personal tax return or pay the income tax to

the IRS for those tax years. Id. ¶¶ 18-20. During that period, Ms. Pezzolo used approximately

$439,596 in company money to pay bills she accrued on her personal credit card for personal

expenses. Id. ¶ 19. Her unpaid personal income taxes was approximately $158,322. Id.

In sum, Ms. Pezzolo’s attributable tax loss totaled $1,329,314. Id. ¶ 20.

Ms. Pezzolo was able to commit the offenses of conviction because she served as the

bookkeeper to whom the owners of Miracle Farm delegated sole responsibility for handling

payment of the company’s bills, managing the company’s books and invoices, handling the

company’s payroll and employment tax obligations. Id. ¶ 9. She had signatory authority over

the business bank account and was the only person who accessed the company QuickBooks

software. Id. She also was personally responsible for meeting the company’s payroll taxes. Id

¶ 10. She was also responsible for providing information to the corporate tax return preparer, who

relied exclusively on that information in preparing the yearly Forms 1120-S for Miracle Farms.

Id. ¶ 9.

B. Procedural History

On January 17, 2023, defendant Melissa Pezzolo waived indictment and pleaded guilty to

a two-count information charging her with willful failure to collect or pay over tax in violation of

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26 U.S.C. § 7202 and tax evasion of assessment in violation of 26 U.S.C. § 7201.

In her plea agreement, Ms. Pezzolo admitted her failure to pay over Miracle Farms’

employee withholding taxes as well as her evasion of her own personal income taxes. See Plea

Agreement, Stipulation of Offense Conduct and Relevant Conduct, Dkt. No. 6, at 12-14. She

agreed to pay restitution in the full amount of that loss: $1,329,314. Id. at 3.

The plea agreement also set out a stipulated Guidelines range. The parties agreed that Ms.

Pezzolo’s base offense level under U.S.S.G. §§ 2T1.6 and 2T4.1 was 20 because the tax loss was

more than $550,000 but not more than $1,500,000. Id. at 5. With three levels subtracted for

acceptance of responsibility, the plea agreement contemplated a total offense level of 17. Id.

Given Ms. Pezzolo’s placement in Criminal History Category I, the parties agreed to a stipulated

Guidelines range of 24 to 30 months of imprisonment, a fine range of $10,000 to $95,000 and a

term of supervised release of one to three years. Id.

The plea agreement also contained the defendant’s waiver of her right to appeal or

collaterally attack any sentence exceeding 30 months of imprisonment, three years of supervised

release, a $200 special assessment, a $95,000 fine and restitution of $1,329,314. Id. at 8.

On April 3, 2023, the U.S. Probation Office filed the final PSR. See Dkt. No. 12. That

document sets forth a somewhat different Guidelines calculation. Beginning with a base offense

level of 20 under U.S.S.G. § 2T1.1(a)(1), as the parties did, the PSR then assesses two additional

enhancements that did not appear in the plea agreement. First, the PSR adds a two-level

enhancement under U.S.S.G. § 2T1.1(b)(1) for failure to report or correctly identify the source of

income exceeding $10,000 in any year from criminal activity. In this case, the PSR notes that “in

each year between 2014 and 2018, Ms. Pezzolo used company funds without authorization in

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amounts varying between $81,460 and $92,201 to pay her personal credit card bills,” funds that

were “in essence stolen or embezzled from her employer, thus constituting income to her from

‘criminal activity.’” Id. ¶ 27.

Second, the PSR adds another two-level enhancement under U.S.S.G. § 3B1.3 for the abuse

of a position of public or private trust or the use of a special skill in a manner that significantly

facilitated the commission or concealment of the offense. Here, the PSR notes that Ms. Pezzolo,

as the office manager and bookkeeper for Miracle Farms, exercised responsibility for the payment

of the company’s bills, management of the company’s books and responsibility for the company’s

payroll and employment tax obligations, all of which was “delegated solely to her.” Id. ¶ 29.

She alone accessed the company’s QuickBooks software and she coordinated with the corporate

tax return preparer, who relied “exclusively” on her information. Id. As the PSR explains, “Ms.

Pezzolo’s role was characterized by substantial discretionary judgment and she was subject to little

supervision,” which “significantly facilitated the commission or concealment of the offense.” Id.

Taking into account both enhancements, the PSR calculates an adjusted offense level of

24, before subtracting three points for acceptance of responsibility, for a higher total offense level

of 21. Id. ¶¶ 31-35. Combined with the defendant’s Criminal History Category of I, the PSR

calculates a higher Guidelines imprisonment range of 37 to 46 months and a higher Guidelines

fine range of $15,000 to $150,000, in addition to the term of supervised release of one to three

years. Id. ¶¶ 82, 91, 97.

II. LEGAL STANDARD

After the Supreme Court’s ruling in United States v. Booker, 543 U.S. 220, 243-245 (2005)

rendered the Sentencing Guidelines advisory rather than mandatory, a sentencing judge is required

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to “(1) calculate[] the relevant Guidelines range, including any applicable departure under the

Guidelines system; (2) consider[] the Guidelines range, along with the other § 3553(a) factors; and

(3) impose[] a reasonable sentence.” See United States v. Fernandez, 443 F.3d 19, 26 (2d Cir.

2006), abrogated on other grounds by Rita v. United States, 551 U.S. 338 (2007). Under 18

U.S.C. § 3553(a), the sentencing “court shall impose a sentence sufficient, but not greater than

necessary, to comply with the purposes set forth in paragraph (2) of this subsection.” The statute

provides that the Court shall consider the following factors in determining the particular sentence

to be imposed:

(1) “[T]he nature and circumstances of the offense and the history and characteristics
of the defendant;

(2) the need for the sentence imposed—

(A) to reflect the seriousness of the offense, to promote respect for the law, and
to provide just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the defendant; and

(D) to provide the defendant with needed educational or vocational training,

medical care, or other correctional treatment in the most effective manner;

(3) the kinds of sentences available;

(4) the kinds of sentence and the sentencing range established [in the Sentencing

Guidelines];

(5) any pertinent policy statement [issued by the Sentencing Commission];

(6) the need to avoid unwarranted sentence disparities among defendants with similar
records who have been found guilty of similar conduct; and

(7) the need to provide restitution to any victims of the offense.”

18 U.S.C. § 3553(a). The Second Circuit reviews a sentence for reasonableness. See Booker,

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543 U.S. at 260-62. The reasonableness standard is deferential and focuses “primarily on the

sentencing court’s compliance with its statutory obligation to consider the factors detailed in 18

U.S.C. § 3553(a).” United States v. Canova, 412 F.3d 331, 350 (2d Cir. 2005).

III. DISCUSSION

The statutory sentencing factors detailed in 18 U.S.C. § 3553(a) present a mixed picture

with respect to the defendant but ultimately, in the government’s view, support a sentence that

includes a period of incarceration.

A. Nature of the Offense

As an initial matter, the defendant’s conduct was a serious offense with significant

consequences for her employer, her fellow employees and the country. In refusing to pay over

withholding taxes and in evading her own personal income taxes, she deprived the United States

of more than one million dollars in revenue to which it was lawfully entitled. Misconduct like

Ms. Pezzolo’s undermines the foundations of our nation’s tax system. The government relies on

its taxpayers to self-assess—and then pay—their federal income taxes. See United States v.

Roundtree, 420 F.3d 845, 850 (5th Cir. 1969) (“The fact is that Congress built the tax code upon

the principle of self-assessment and voluntary compliance with the Code’s rules and regulations.”).

Similarly, the law enlists the good-faith cooperation of employers not only to pay their own direct

taxes, but to calculate, collect, and pay over their employees’ federal income taxes and share of

Social Security and Medicare taxes.

Ms. Pezzolo occupied an important role in this system of voluntary compliance. As a

wage-earner, she enjoyed meaningful income and a corresponding obligation to support the United

States by paying her fair share of personal income taxes. As the person designated a responsible

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party by her employer, she took on the significant duty of withholding and paying taxes on behalf

of Miracle Farms employees, as well as the company’s own FICA taxes. That money was to be

used by the government for the common good of the American people—for example, by funding

benefits to such eligible individuals as retirees, those with disabilities, the unemployed and

children of deceased workers. When tax offenders deprive this system of needed revenue, they

create harms that are broadly distributed, but are no less real for being diffuse. By ignoring her

responsibilities, Ms. Pezzolo caused damage felt and borne in some sense by the whole public.

Her conduct in the instant case is serious in part because of the many years over which it

persisted. Ms. Pezzolo has admitted to evading taxes at least back to 2014 and continuing through

2019. That length of time suggests that her crime was not the product of some momentary lapse,

but rather a course of conduct deliberately maintained for years.

As a general matter, therefore, the consequences of the defendant’s crimes are serious. In

this case, however, those consequences fall not just on the U.S. government and the American

public in diffuse fashion. Here, Ms. Pezzolo’s crimes carried serious—and concentrated—costs

for her employers at Miracle Farms, especially owner Gregory Maroun, and her fellow employees.

In addition to failing to pay over the taxes owed, Ms. Pezzolo embezzled between $80,000

and $90,000 each year from her employer between 2014 and 2018. PSR ¶ 19. Over the course

of those five years, Ms. Pezzolo used company money to pay bills she accrued on her personal

credit card for personal expenses. Id. Her theft from her employer totaled approximately

$439,596—no insignificant sum for a small business owner. Id. Also, in failing to pay over $1.1

million in employment taxes owed by Miracle Farms, Ms. Pezzolo created an unanticipated tax

liability that Mr. Maroun, as the owner, was unaware existed. Having employed and trusted Ms.

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Pezzolo to run his business for about two decades, Mr. Maroun was stunned by her perfidy when

it came to light.

Moreover, Ms. Pezzolo’s crimes had a direct impact on her colleagues at Miracle Farms.

As part of her scheme, Ms. Pezzolo issued Forms W-2 to company employees, but never actually

filed them with the Social Security Administration (SSA). Accordingly, Miracle Farms

employees did not receive credit for payments that should have been made into the SSA on their

behalf—even though these purported payments were withheld from their paychecks. Absent

correction, those employees would receive unfairly reduced Social Security benefits if and when

they file for retirement benefits with the SSA. Because Miracle Farms employed approximately

25 to 45 individuals per year, Ms. Pezzolo’s failure to pay over withholding taxes affected many

other innocent workers.

As it happens, once he learned of the instant offenses, Mr. Maroun engaged an attorney to

represent the interests of his employees and to accurately report his employees’ former W-2 wages

to SSA. In other words, Miracle Farms’ owner is now acting to ensure that his current and former

employees do not find the retirement benefits to which they are entitled reduced by the defendant’s

tax crimes. Assisted by counsel, Mr. Maroun also began the process of repaying the business’

withholding taxes that Ms. Pezzolo unlawfully failed to pay. Mr. Maroun’s legal fees represent

another category of loss occasioned by the defendant’s crimes. And of course, Mr. Maroun has

been unable to recoup the over $400,000 that Ms. Pezzolo embezzled from his business.

In short, Ms. Pezzolo evaded years of taxes for a total loss exceeding $1.3 million. Her

criminal conduct not only deprived the U.S. government of money it was lawfully owed, but it

represented a betrayal of her employer’s trust and involved direct losses to her boss Gregory

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Maroun and serious consequences to the many other employees, which the victims continue to

work to untangle.

B. Deterrence & Respect for the Law

In addition to the serious nature of the offense, this Court should weigh heavily the need

for general deterrence—a consideration that should constitute a particularly important

consideration in tax fraud cases. As the Sentencing Commission puts it: “Because of the limited

number of criminal tax prosecutions relative to the estimated incidence of such violations,

deterring others from violating the tax laws is a primary consideration underlying these guidelines.

Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the

offense should act as a deterrent to would-be violators.” U.S.S.G. Ch. 2, Pt. T, introductory cmt.

The Second Circuit has sounded the same theme, observing that “general deterrence occupies an

especially important role in criminal tax offenses, as criminal tax prosecutions are relatively rare.”

United States v. Park, 758 F.3d 193, 201 (2d Cir. 2014).

As explained, our nation’s tax system relies on individuals to self-report and pay their

income taxes, and it relies on employers and their representatives to properly account for and

withhold certain taxes on behalf of their employees. A system that so depends on the good faith

of its participants is ill-served by a perception that tax fraudsters—even long-term, high-loss tax

fraudsters—can take their chances with noncompliance until luck runs out, and then avoid

meaningful consequences in the event they are actually caught and prosecuted.

Indeed, such an outcome would not only cut strongly against the general deterrence that

any sentencing judge must seek to achieve, but also would fail entirely to promote respect for the

law—another critical consideration in a tax fraud case. Indeed, the absence of meaningful

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consequences in a case like this could actually promote disrespect for law by suggesting that

criminal tax evasion can be tolerated.

Nowhere near ever tax dodger can be caught and prosecuted. See U.S.S.G. Ch. 2, Pt. T,

introductory cmt. That being so, if even serious tax offenses are perceived not to carry meaningful

consequences (including jail time), rational actors could well conclude that tax crime is worth the

gamble. The Court’s sentence should send a clear message that it is not.

C. Defendant’s History and Characteristics

The defendant’s history and characteristics present certain mitigating factors, which must

be weighed against the seriousness of her offense, the need for deterrence and the requirement that

any sentence promote respect for the law. As set forth at greater length in the Defendant’s

Memorandum, Ms. Pezzolo is a 66-year-old woman with no prior involvement at all with the

criminal justice system. According to the PSR, she has no prior arrests, no pending charges and

no prior criminal convictions. Her criminal history score is, accordingly, zero, and she falls into

the lowest Criminal History Category of I. The absence of any criminal record before this case

must also factor into the Court’s consideration regarding the statutory sentencing factors of specific

deterrence and protection of the public. See 18 U.S.C. §§ 3553(a)(2)(B)-(C). As compared to

recidivist criminal defendants, there is certainly less concern in the instant case regarding

deterrence of a first-time defendant like Ms. Pezzolo from committing future crimes.

Similarly, the Court should harbor much less concern about protecting the public from her

in the future. Although the instant crimes extended over a prolonged period, they appear to

represent something of an aberration in Ms. Pezzolo’s life, which is otherwise characterized by

steady, lifelong employment as a bookkeeper, a nursing assistant, and in other positions over the

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years. Further, at 66 years old, Ms. Pezzolo is much less likely to reoffend than those falling in a

younger demographic. Additionally, it is notable that Ms. Pezzolo cooperated with the

investigation, admitted guilt and accepted responsibility, and has remained in full compliance with

her conditions of release.

D. Guidelines Calculation

Among its considerations of the other § 3553(a) factors, the Court must determine and

consider the applicable Sentencing Guidelines. Given that the Guidelines stipulation in the

parties’ plea agreement differs from that set forth in the PSR, it is necessary to briefly touch upon

the appropriate calculation.

In the PSR, the U.S Probation Office sets forth a valid and defensible overall calculation,

including the two enhancements—for special skill/violation of a private trust, and for failure to

report a source of income over $10,000 in any year from criminal activity—that did not appear in

the plea agreement stipulation. Nonetheless, with respect to the enhancement for special

skill/abuse of private trust under U.S.S.G. § 3B1.3, there is some question as to whether Ms.

Pezzolo role as a bookkeeper fulfills the letter and spirit of the Guideline. By its terms, the

Guideline is intended to apply to individuals whose work is “characterized by professional or

managerial discretion” and “substantial discretionary judgment.” U.S.S.G. § 3B1.3, Application

Note 1. In her sentencing memorandum, Ms. Pezzolo attests to the fact that business “decisions

were left totally and completely to her”—a circumstance that seems to weigh in favor of

application of the private trust enhancement. Defendant’s Memorandum at 8.

On the other hand, Ms. Pezzolo argues that her position is much closer to that of a bank

teller or hotel clerk—those to whom the private trust enhancement does not apply, according to

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the Guidelines—than to an “attorney serving as a guardian, a bank executive . . . [or] a physician

[who abuses a patient] under the guise of an examination.” U.S.S.G. § 3B1.3, Application Note

1. Given Ms. Pezzolo’s relative lack of training or educational credentials (she has earned only a

high school diploma) and her middle-income salary of about $65,000 per year, there is some force

to this argument. Accordingly, in view of the litigation risk were the enhancement to be applied,

the government does not press the Court for application of this private trust enhancement.

In any event, the Government asks the Court for a departure under United States v.

Fernandez, 877 F.2d 1138 (2d Cir. 1989) to effectuate the terms of the parties’ plea agreement.

If the Court were to grant such a departure, the Guidelines range would be 24 to 30 months of

imprisonment.

A final Guidelines adjustment may be relevant here. As discussed further in the

Defendant’s Memorandum, Ms. Pezzolo constitutes a so-called “zero point offender” in that she

has never been convicted of (or even arrested for) any prior crimes and has thus accrued zero

criminal history points. Under the proposed amendments to the Sentencing Guidelines, which are

expected to go into effect in several months, Ms. Pezzolo would be eligible to receive a two-level

reduction in her offense level, if she were sentenced after November 2023. See Proposed

Amendments to the Sentencing Guidelines, available at

https://www.ussc.gov/sites/default/files/pdf/amendment-process/reader-friendly-

amendments/20230405_prelim-RF.pdf (last accessed June 16, 2023). Although as a general

matter, the U.S. Attorney’s Office has taken no position as to the propriety of applying the

prospective “zero point offender” Guideline to sentencings held in the intervening months, the

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government notes that if the Court were to adopt a variance to credit the “zero point offender”

calculation, the Guidelines range in this case would drop to 18 to 24 months of imprisonment.

***

Taking into account all of the § 3553(a) factors, the Government submits that a sentence

of 18 months or more of imprisonment would be appropriate in this case. Such a sentence would

fall within the (adjusted) Guidelines range, as described above. Further, a custodial sentence of

that length would adequately reflect the seriousness of the offense, afford adequate general

deterrence to criminal conduct and promote respect for the law, while also taking into account the

mitigating factors in the defendant’s history and characteristics and ensuring that the overall

sentence is sufficient, but not greater than necessary, to satisfy the objectives of federal sentencing.

Additionally, the Court may order restitution “to the extent agreed to by the parties in a plea

agreement,” pursuant to 18 U.S.C. § 3663(a)(3). Here, Ms. Pezzolo agreed in her plea agreement

to pay $1,329,314 in restitution, representing the full amount of the loss, and the Court accordingly

should order her to do so in its judgment.

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IV. CONCLUSION

On the basis of all of the § 3553(a) factors, the Government seeks the imposition of a

custodial sentence of 18 months or more, coupled with an order for restitution, which is sufficient

but not greater than necessary to satisfy the objectives of federal sentencing.

Respectfully submitted,
VANESSA ROBERTS AVERY
UNITED STATES ATTORNEY

/s/

ELENA LALLI CORONADO

ASSISTANT UNITED STATES ATTORNEY
Federal Bar No. phv09758
Elena.Coronado@usdoj.gov
1000 Lafayette Blvd, 10th Floor
Bridgeport, Connecticut 06604
(203) 696-3000

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CERTIFICATION

I hereby certify that on June 16, 2023, the foregoing Memorandum was filed electronically.
Notice of this filing will be sent by e-mail to all parties by operation of the Court’s electronic filing
system or by mail to anyone unable to accept electronic filing. Parties may access this filing
through the Court’s system.

/s/

ELENA LALLI CORONADO

ASSISTANT UNITED STATES ATTORNEY

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