State of Tennessee v. David Weed ( 2012 )

IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT JACKSON
July 12, 2011 Session
STATE OF TENNESSEE v. DAVID WEED
Direct Appeal from the Criminal Court for Shelby County
No. 09-04872 James C. Beasley, Jr., Judge
No. W2010-01078-CCA-R3-CD - Filed August 6, 2012
Defendant, David Weed, was indicted by the Shelby County Grand Jury for two counts of
official misconduct, a Class E felony. Defendant pleaded guilty to the offenses charged and
was sentenced by the trial court to two years in the Shelby County Workhouse for each count,
with all but 90 days suspended, after which Defendant would be placed on probation for five
years. Defendant’s sentences were ordered to be served concurrently. Defendant appeals his
sentences and asserts that the trial court erred by denying his request for judicial diversion,
or in the alternative, his request for full probation. After a careful review of the record, we
affirm the judgments of the trial court.
Tenn. R. App. P. 3; Appeal as of Right; Judgments of the Criminal Court Affirmed
T HOMAS T. W OODALL, J., delivered the opinion of the Court, in which J OSEPH M. T IPTON,
PJ., and N ORMA M CG EE O GLE, J., joined.
James E. Thomas, Memphis, Tennessee, for the appellant, David Weed.
Robert E. Cooper, Jr., Attorney General and Reporter; Sophia S. Lee, Assistant Attorney
General; Amy P. Weirich, District Attorney General; Micheal A. Meyer, Deputy Attorney
General, and William Bright, Assistant District Attorney General, for the appellee, the State
of Tennessee.
OPINION
Guilty plea submission hearing
At the guilty plea hearing, the State summarized the facts underlying the offenses as
follows:
[T]he defendant, a licensed attorney, was serving as a receiver for
various types of receivership estates.
Some of these estates related to receivership proceedings that had
been brought by the Commissioner of Commerce and Insurance against
various insurance companies [that] had become insolvent or had otherwise
violated state law.
In cases where the defendant was acting as a receiver in this capacity
he was acting as a public official or public servant. Under the insurance
laws[, the] Commissioner of Commerce and Insurance appointed him to
serve as a special deputy receiver, and in that capacity acted on behalf of the
Commissioner in the State of Tennessee.
The defendant also served as a court appointed receiver for Cherokee
Children and Family Services, a non-profit public charity that had acted as
a broker to provide daycare services for low income families. During the
same period the defendant was appointed to serve as a receiver for various
non-profit daycares that had operated in the Memphis area.
The defendant was acting as a public servant and an officer of the
Court in the performance of those duties. Defendant was appointed to serve
as a receiver after a Court had found the persons who had operated them,
had abused their position of trust by converting daycare assets that had been
placed in their care, and they had done that for a personal use.
In all the receiverships under his care the defendant had a duty to act
in the best interest of the estates. Each of the receivership estates
represented separate entities. Claims for each estate had to be paid from the
assets of that particular estate and if the assets of an estate were not
sufficient to pay fees and expenses the defendant could not use assets from
another receivership to pay those claims that had been unsatisfied.
And any fees or expenses that the defendant earned or incurred for
[a] receivership estate could only be paid out of the available funds for that
receivership. The defendant did not have the permission of the Court, the
Commissioner of the Department of Commerce and Insurance to use assets
as I just described.
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And furthermore there was no legal basis to use funds in that
manner. . . . . while acting as a special deputy receiver, special deputy
commissioner of the Department of Commerce and Insurance he took funds
from a number of receiverships under his control and paid the expenses of
three other receiverships, the receiverships for Children’s Palace, Learning
Academy, Creative Learning Day[c]are Center and Jack and Jill Day[c]are
Center.
Included in the expenses was over $101,000 in fees that he paid to
himself, and he paid those amounts without the knowledge or permission
of the Commissioner of the Department of Commerce and Insurance.
After questions were raised about the amount of money that was in
each of the receivership accounts the defendant transferred funds from
Cherokee Children and Family Services in the amount of $89,900 back to
the bank account that was under the insurance receivership control.
And all of these offenses would have been shown to have occurred
in Shelby County.
Sentencing hearing
At the sentencing hearing, Defendant testified that “[t]here’s no question about” his
guilt of the offenses and that he “accept[ed] full responsibility for what happened and [was]
very sorry that it did.” Defendant testified that “[i]t could have been prevented if [he] had
done [his] job correctly.”
Defendant testified that he graduated from law school in 1974 and began working for
the Tennessee Attorney General’s office. In 1984, Defendant was appointed by the
Commissioner of the Department of Commerce and Insurance to supervise receiverships for
the State. In 1998, Defendant became the Director of the Tennessee Receiver’s Office
(“TRO”).
Defendant explained that the State places an entity into a receivership when the entity
can no longer pay its bills or there are claims of fraud or embezzlement against the entity.
The receiver marshals the assets and evaluates and pays claims of the entity. In some
instances, the entity continues to operate while its assets and claims are managed by the
receiver; however, in cases where it is “clear from the beginning” that the entity cannot meet
its financial obligations, it can be liquidated and dissolved.
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In 2001, Defendant was appointed by the Attorney General’s Office to supervise
receiverships for several daycare centers. He testified that there were three separate checking
accounts for each receivership: a payroll account, an operating account, and “a Memphis
operating account.” He also maintained an interest bearing “sweep account,” in which he
would deposit funds from other accounts until those funds were needed. Defendant testified
that the daycare centers received “tens of thousands of dollars” every month from the State.
Defendant testified that there was “never . . . enough money to pay [all the obligations of
each daycare] one-hundred percent exactly on time. . . .” Defendant admitted that if there
were insufficient funds to pay the obligations of a daycare, he withdrew money from another
daycare’s receivership account to pay them. Defendant testified, “[t]hat’s what happened
because I didn’t do my job right.” Defendant also testified, “I accept full responsibility for
what happened.” Defendant testified that he “didn’t stay on top of the finances.” He “had
no [accounting] help” and that there were insufficient funds in the receiverships to pay for
accounting services.
Defendant acknowledged that in February, 2006, he transferred $90,000, which
Cherokee Children had collected from a settlement, from the Cherokee Children receivership
account to an insurance receivership account to cover a shortfall. Defendant denied
transferring the money because he was being investigated for the offenses for which he was
convicted. Defendant testified that the Attorney General approved the transfer of funds.
Defendant testified that his fees were paid out of the receivership accounts. He was
required to petition the court to authorize his fees. He testified that he was still owed
$101,000 from the Jack and Jill Daycare Center. His payment for those fees was denied by
the chancery court because he failed to provide the court a proper accounting.
Defendant testified that he was 61 years of age at the time of the sentencing hearing.
His law license was suspended the prior year, and he had some health problems.
Mary Moody, Deputy Commissioner of the Tennessee Department of Commerce and
Insurance (“the Department”), testified that between January, 2003, and March, 2007, she
was General Counsel for the Department and supervised insurance receivership programs.
She testified that the Department did not oversee daycare receiverships and she understood
that the State Attorney General supervised those estates because they were non-profit entities.
Ms. Moody testified that it is a receiver’s duty to marshal the assets of the receivership and
to pay the claimants of the receivership. She explained that receivers must submit detailed,
verified statements of services performed in order to be paid fees out of the receivership
estate. Bills for services rendered by receivers are reviewed by the Department’s internal
audit office for accuracy and reasonableness.
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Ms. Moody testified that the Department would “absolutely not” authorize payment
for a daycare receivership’s expenses from an insurance receivership’s estate. Ms. Moody
testified that she was not familiar with the practice of depositing funds into a “sweep”
account. She testified that with insurance companies in receivership, separate accounts are
maintained for each estate, and the Commissioner is a signatory on each account because the
Commissioner is the receiver and ultimately responsible for the funds.
She testified that she understood that the TRO was a private entity and not operating
under the authority of the Department. Questions concerning Defendant’s conduct were
raised after she became aware that funds from several receiverships monitored by Defendant
as deputy receiver were deposited into one master bank account. She and Commissioner
Paula Flowers began investigating Defendant’s conduct.
Paul Eggers, a CPA and Special Deputy for the Commissioner of the Department,
further explained the duties of a receiver. Mr. Eggers testified that the assets of a
receivership belong to the claimants of the estate. He testified that in “[n]o situation” would
he transfer funds from one estate to pay the expenses of another unless he was ordered by a
court to do so. In 2006, Mr. Eggers replaced Defendant as receiver for Petroleum Marketers
Mutual Insurance Company. He requested from Defendant the company’s books and
records, and Defendant gave him a banker’s box full of bank statements, and two-thirds of
the statements had not been opened. In reconstructing the records, Mr. Eggers discovered
approximately one half million dollars in uncashed checks to claimants. The value of the
outstanding checks exceeded the balance of the checking account. When Mr. Eggers asked
Defendant about the checks, Defendant stated that he did not have the resources to locate the
claimants. Mr. Eggers determined that the account was insufficient by $200,000 to pay the
claims authorized by the court. In reviewing the bank records, Mr. Eggers noticed other
suspicious activity. In 2004, there were several cash withdrawals made using counter checks
with no explanation as to the reason for the withdrawal. There were also transfers to
accounts of which Mr. Eggers had no knowledge. Mr. Eggers compiled this information in
a report that he gave to the Department. Mr. Eggers testified that he was familiar with a
sweep account; however, he testified he “would never co-mingle funds from different
receivership estates” into a sweep account.
Torry Grimes, a Special Investigations auditor for the Division of State Audit for the
Comptroller Treasury, testified that he performed an investigative audit on the TRO. Mr.
Grimes noted several transactions whereby funds were transferred from the TRO insurance
receivership account to pay expenses of the daycare receiverships beginning in early 2005.
Mr. Grimes determined that at the end of 2005, the daycare receiverships owed the TRO
insurance account $270,149. Mr. Grimes testified that in February, 2006, after Mr. Eggers
was appointed as receiver, a deposit was made into the TRO insurance claims account with
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a check in the amount of $45,000 drawn on an account of Cherokee Children, and another
deposit of $104,000 was made into the TRO account, of which $44,900 was from Cherokee
Children, $42,800 and $13,900 from Jack and Jill, and $2,400 from Creative Learning. The
deposits into the TRO account decreased the deficit in that account, or the amount owed to
the daycare accounts. Mr. Grimes testified that over the course of a 17-month period,
$101,983 was transferred to Defendant’s personal account. Most of that money was
transferred from the Children’s Palace account.
The trial court found that Defendant had no prior criminal history. The trial court
noted that the receivership accounts were negligently managed by Defendant, and as a result,
substantially overdrawn; however, Defendant consistently paid himself from the receivership
accounts for his fees. The trial court emphasized that Defendant had extensive experience
in managing receiverships and stated:
[I]f there’s anybody, I would assume that we would call an expert in this
field, it would be [Defendant] and, therefore, his statements and his
testimony that he just got overwhelmed and this was just some mistakes I
find hard to accept, and that’s the troubling part of it.
Because, again, I have a man who’s sixty years old who has devoted his
career to this type of a profession who gets caught up in a situation –
arguably toward the end of his career – with this misconduct and that’s the
part of all this that’s very disturbing to me.
In determining whether Defendant should have been placed on judicial diversion, the
trial court found the following factors to weigh in Defendant’s favor: 1) that Defendant was
amenable to correction, 2) that Defendant had no prior criminal history, 3) Defendant’s social
history, and 4) Defendant’s physical and mental health.
The court found that the circumstances of the offense weighed against judicial
diversion in that Defendant’s conduct was “[a] systematic course of misconduct over an
extended period of time.” The court also noted that because Defendant was in a position of
public trust, denial of judicial diversion would have a deterrent effect and that it was in the
public interest that Defendant be sentenced to confinement. The court found that Defendant
“was given a responsibility based upon his reputation and his character and placed in a
position of very high public trust, . . . and [Defendant] abused that trust.” Finally, the court
“was not overly impressed” with Defendant’s testimony at the sentencing hearing and found
him to be less than forthcoming and truthful in his explanation of his conduct.
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The trial court considered statutory enhancement and mitigating factors and sentenced
Defendant to two years confinement for each offense. His sentences were ordered to be
served concurrently. Relying on the same factors the trial court considered in determining
Defendant’s candidacy for judicial diversion, the trial court also denied Defendant’s request
for full probation. In addition to those factors, the trial court also found that Defendant could
reasonably be expected to be rehabilitated; that Defendant would abide by the terms of
probation; that due to the suspension of Defendant’s law license, it was unlikely that
Defendant would be placed in another receiver position, and therefore, he did not pose a
threat to society; and that a sentence of full probation would depreciate the seriousness of the
offense.
The trial court ordered that Defendant serve 90 days in confinement with the
remainder of his sentence suspended and that he be placed on probation for a period of five
years. Defendant was also ordered to pay restitution in the amount of $101,900 at the rate
of $100 per month.
Analysis
Defendant asserts that the trial court erred by denying his request for judicial diversion
or, in the alternative, a sentence of full probation. Specifically, he argues that there is no
substantial evidence in the record to support the trial court’s decision. Defendant relies upon
his lack of criminal history and amenability to correction to support his position that judicial
diversion was appropriate in this case.
Before a trial court imposes a sentence upon a convicted criminal defendant, it must
consider: (a) the evidence adduced at the trial and the sentencing hearing; (b) the presentence
report; (c) the principles of sentencing and arguments as to sentencing alternatives; (d) the
nature and characteristics of the criminal conduct involved; (e) evidence and information
offered by the parties on the enhancement and mitigating factors set forth in Tennessee Code
Annotated sections 40-35-113 and 40-35-114; (f) any statistical information provided by the
Administrative Office of the Courts as to Tennessee sentencing practices for similar offenses;
and (g) any statement the defendant wishes to make in the defendant’s own behalf about
sentencing. Tenn. Code Ann. § 40-35-210(b); see also State v. Imfeld, 70 S.W.3d 698, 704
(Tenn. 2002). To facilitate appellate review, the trial court is required to place on the record
its reasons for imposing the specific sentence, including the identification of the mitigating
and enhancement factors found, the specific facts supporting each enhancement factor found,
and the method by which the mitigating and enhancement factors have been evaluated and
balanced in determining the sentence. See State v. Samuels, 44 S.W.3d 489, 492 (Tenn.
2001).
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Upon a challenge to the sentence imposed, this Court has a duty to conduct a de novo
review of the sentence with a presumption that the determinations made by the trial court are
correct. See Tenn. Code Ann. § 40-35-401(d). However, this presumption “is conditioned
upon the affirmative showing in the record that the trial court considered the sentencing
principles and all relevant facts and circumstances.” State v. Ashby, 823 S.W.2d 166, 169
(Tenn. 1991). If our review reflects that the trial court followed the statutory sentencing
procedure, that the court imposed a lawful sentence after having given due consideration and
proper weight to the factors and principles set out under the sentencing law, and that the trial
court’s findings of fact are adequately supported by the record, then the presumption is
applicable, and we may not modify the sentence even if we would have preferred a different
result. See State v. Fletcher, 805 S.W.2d 785, 789 (Tenn. Crim. App. 1991). We will uphold
the sentence imposed by the trial court if (1) the sentence complies with the purposes and
principles of the 1989 Sentencing Act and (2) the trial court’s findings are adequately
supported by the record. See State v. Arnett, 49 S.W.3d 250, 257 (Tenn. 2001). The burden
of showing that a sentence is improper is upon the appealing party. See Tenn.Code Ann. §
40-35-401, Sentencing Commission Comments; Arnett, 49 S.W.3d at 257.
In the present case, it is evident from the record that, prior to imposing the
Defendant’s sentence of split confinement, the trial court considered Tennessee’s sentencing
principles and other relevant considerations set out above. Accordingly, the presumption of
correctness regarding the trial court’s sentencing determinations applies in this appeal. See
Ashby, 823 S.W.2d at 169. For the reasons set forth below, we conclude that the trial court’s
denial of judicial diversion and full probation was not error.
A defendant who does not possess a criminal history showing a clear disregard for
society’s laws and morals, who has not failed past rehabilitation efforts, and who “is an
especially mitigated or standard offender convicted of a Class C, D or E felony, should be
considered as a favorable candidate for alternative sentencing options in the absence of
evidence to the contrary.” Tenn. Code Ann. § 40-35-102(6). The following considerations
provide guidance regarding what constitutes “evidence to the contrary”:
(A) Confinement is necessary to protect society by restraining a defendant
who has a long history of criminal conduct;
(B) Confinement is necessary to avoid depreciating the seriousness of the
offense or confinement is particularly suited to provide an effective
deterrence to others likely to commit similar offenses; or
(C) Measures less restrictive than confinement have frequently or recently
been applied unsuccessfully to the defendant....
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Tenn. Code Ann. § 40-35-103(1); see also State v. Hooper, 29 S .W.3d 1, 5 (Tenn. 2000).
Additionally, the principles of sentencing reflect that the sentence should be no greater
than that deserved for the offense committed and should be the least severe measure
necessary to achieve the purposes for which the sentence is imposed. Tenn. Code Ann. §
40-35-103(2), (4). The court should also consider the defendant’s potential for rehabilitation
or treatment in determining the appropriate sentence. Tenn. Code Ann. § 40-35-103(5). In
this case, we point out that the Defendant did receive an alternative sentencing option; that
is, he received a sentence of split confinement rather than total incarceration.
Denial of judicial diversion
A defendant may be granted judicial diversion when he or she is found or pleads
guilty to a Class C, D, or E felony, has not previously been convicted of a felony or Class A
misdemeanor, and is not being sentenced for certain sex offenses. Tenn. Code Ann. §
40-35-313(a)(1)(B). However, eligible defendants are not automatically entitled to judicial
diversion. See State v. Harris, 953 S.W.2d 701, 705 (Tenn. Crim. App. 1996). The decision
of whether to grant judicial diversion rests within the sound discretion of the trial court, and
this Court will find an abuse of that discretion only if there is no substantial evidence
supporting the denial of judicial diversion. See Robinson, 139 S.W.3d at 665 (citing State
v. Cutshaw, 967 S.W.2d 332, 344 (Tenn. Crim. App. 1997)).
Our review of the record shows that the trial court set forth in detail the factors upon
which it relied in denying judicial diversion. Those factors included Defendant’s abuse of
a position of public trust and what the court described as a “systematic course of misconduct
over an extended period of time.” The court also found that Defendant lacked candor with
the court. Based on the presence of these factors supporting the trial court’s decision, we
must conclude that the trial court did not abuse its discretion in denying the Defendant
judicial diversion. See Robinson, 139 S.W.3d at 665; see also Tenn. Code Ann. §
40-35-103(1)(B).
Denial of full probation
A defendant is eligible for probation if the actual sentence imposed upon the
defendant is ten years or less and the offense for which the defendant is sentenced is not
specifically excluded by statute. See Tenn. Code Ann. § 40-35-303(a). The trial court shall
automatically consider probation as a sentencing alternative for eligible defendants; however,
the defendant bears the burden of proving his or her suitability for probation. See Tenn.
Code Ann. § 40-35-303(b). No criminal defendant is automatically entitled to probation as
a matter of law. See Tenn. Code Ann. § 40-35-303(b), Sentencing Commission Comments;
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State v. Davis, 940 S.W.2d 558, 559 (Tenn. 1997). Rather, the defendant must demonstrate
that probation would serve the ends of justice and the best interests of both the public and the
defendant. See State v. Souder, 105 S.W.3d 602, 607 (Tenn. Crim. App. 2002).
In determining whether to grant probation, the court must consider the nature and
circumstances of the offense; the defendant’s criminal record; his or her background and
social history; his or her present condition, both physical and mental; the deterrent effect on
the defendant; and the defendant’s potential for rehabilitation or treatment. See id. If the
court determines that a period of probation is appropriate, it shall sentence the defendant to
a specific sentence but then suspend that sentence and place the defendant on supervised or
unsupervised probation either immediately or after the service of a period of confinement.
See Tenn. Code Ann. §§ 40-35-303(c), -306(a).
A defendant who is eligible for probation, as the Defendant is in this case, bears the
burden of proving his or her suitability for full probation. See Tenn.Code Ann. §
40-35-303(b). In this case, the trial court found that the facts underlying the Defendant’s
crime were sufficient to justify a denial of full probation. In addition to the factors
considered by the trial court in denying judicial diversion, the trial judge also determined that
a sentence of full probation would depreciate the seriousness of the offense and that a
sentence of confinement was necessary to provide an effective deterrent. The trial court
stated:
[T]he community and society tends to look to these particular positions
when we place people in a position of trust, when the Courts rely on them,
when law enforcement agencies rely on them, when the public relies on
people based upon their experience, their training, their abilities.
And then when those people get caught with their hand in the cookie jar for
lack of a better way to describe it, the public looks to see how is the Court
system going to view this.
How, because this is a white collar crime, if you will. How, because this is
somebody that’s in a unique position. Do we treat them any differently?
Well, to me because of the nature of this public trust that was placed in
[Defendant], because there are other people involved in this type of
business, and the amount of money involved is a very seriously large
amount of money, and this Court feels that full probation would unduly
depreciate the seriousness of this offense.
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And, further, the Court finds that full probation would not provide an
effective deterrent to others likely to commit this offense.
We conclude that the record supports the trial court’s denial of full probation.
Defendant is not entitled to relief.
CONCLUSION
Finding no error in the record, we affirm the judgment of the trial court.
_________________________________
THOMAS T. WOODALL, JUDGE
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