State Of Washington v. Michael C. Mckinnon ( 2016 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
co<
STATE OF WASHINGTON, No. 74008-3-1
CI
Respondent, DIVISION ONE
v.
up Ct ••-'•
MICHAEL C. McKINNON, UNPUBLISHED
en
Appellant. FILED: August 29. 2016
Cox, J. — Michael McKinnon appeals his judgment and sentence for theft
by deception, arguing that insufficient evidence supports his conviction. We hold
that the State failed to prove that he obtained control of property through aid or
color of deception, one of the necessary elements of theft by deception.
Accordingly, we reverse his conviction.
In 2006, the Maplevine Condominium Homeowners Association hired
McKinnon to provide accounting and bookkeeping services. As part of these
services, McKinnon would receive the association's dues and other income and
pay the association's bills. McKinnon was authorized to pay himself for his
services.
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In 2007, McKinnon began taking funds from the association's accounts
without its authorization. He characterized this as "borrowing," and periodically
repaid some or all of the funds with interest.
McKinnon provided the association with yearly spreadsheets listing the
association's funds. In these spreadsheets, McKinnon would list the funds he
misappropriated as being in non-existent accounts. For example, in 2007
McKinnon provided a spreadsheet to the association that showed $10,616.98 in
a "Cascade Savings" account. McKinnon had actually misappropriated these
funds.
Between 2007 and 2011, McKinnon took approximately $134,000 from
the association's accounts without authorization. During this same period, he
repaid approximately $142,000 to the association, including $8,000 of interest.
In 2011, the association hired a management company and no longer
required McKinnon's services. McKinnon then disclosed that he had been taking
money from the association's accounts for his personal use. He stated that he
periodically withdrew money from the accounts, which he later repaid with
interest. In September 2011, McKinnon paid the association $23,000 to repay
the last of the funds he took. The association did not report McKinnon's actions
to authorities at that time.
The association later audited its financial records and confirmed that
McKinnon took funds without authorization and repaid them with interest.
In March 2014, the association reported McKinnon's unauthorized use of
funds to the Lynnwood Police Department and the Snohomish County
No. 74008-3-1/3
Prosecutor. In a voluntary interview with a police officer, McKinnon admitted to
the facts described earlier. In August 2014, the police department referred the
case to the Snohomish County Prosecutor for charging review.
In January 2015, the State charged McKinnon with first-degree theft,
alleging that he obtained control of the association's funds "by color or aid of
deception." At this time, the statute of limitations to charge McKinnon with
embezzlement had expired.
McKinnon moved to dismiss the case under State v. Knapstad1 for failure
to establish every element of the offense. The trial court denied the motion.
The parties agreed to a bench trial on stipulated documentary evidence.
The court determined that McKinnon was guilty of theft by deception.
McKinnon moved to arrest judgment, arguing that while the evidence
established embezzlement, it did not establish theft by deception. The trial court
denied the motion.
McKinnon appeals.
THEFT
McKinnon argues that there is insufficient evidence of theft by deception in
this case. We agree.
RCW 9A.56.020 sets out different means by which a person may commit
the crime of theft. One means is to wrongfully "exert unauthorized control over
the property or services of another."2 This means is commonly known as
1 107 Wash. 2d 346, 729 P.2d 48 (1986).
2RCW9A.56.020(1)(a).
No. 74008-3-1/4
embezzlement.3 A different means, known as theft by deception, is "[b]y color or
aid of deception to obtain control over the property or services of another."4
Although these are alternate means of committing the same crime, a
three-year statute of limitations applies to embezzlement, while a six-year statute
applies to theft by deception.5
These crimes are not "mutually repugnant"—under some circumstances, a
defendant may commit both theft by deception and embezzlement.6 Proving
one means does not necessarily disprove the other.7
McKinnon raises a variety of challenges on appeal. He challenges the
court's denial of his Knapstad motion, its determination that sufficient evidence
supported finding him guilty of theft by deception, and its ruling that the statute of
limitations for embezzlement did not bar prosecuting McKinnon.
But a single question resolves all of McKinnon's claims: do the facts of this
case provide sufficient evidence that McKinnon committed theft by deception?
3 State v. Joy, 121 Wash. 2d 333, 339, 851 P.2d 654 (1993).
4RCW9A.56.020(1)(b).
5 RCW 9A.04.080(1)(d)(iv), (1)(h).
6 State v. Pettit, 74 Wash. 510, 519, 133 P. 1014 (1913) (analyzing former
larceny statute). RCW 9A.56.020 is a recodification of the former larceny
statute—the elements of theft by deception and embezzlement have not
materially changed. State v. Southard, 49 Wash. App. 59, 62 n.2, 741 P.2d 78
(1987).
7 Id.
No. 74008-3-1/5
Sufficiency of the Evidence
McKinnon argues that insufficient evidence supports his conviction for
theft by deception. We agree.
Evidence is sufficient when any rational trier of fact could find beyond a
reasonable doubt the essential elements of the crime.8 When considering a
sufficiency challenge, we defer to the fact finder's determination as to the
evidence's weight and credibility.9 "In claiming insufficient evidence, the
defendant necessarily admits the truth of the State's evidence and all reasonable
inferences that can be drawn from it."10 Whether evidence is sufficient is a
question of constitutional law that we review de novo.11
Here, the crucial inquiry is whether there is sufficient evidence that
McKinnon obtained control of the association's funds by color or aid of deception,
as the theft by deception statute requires.12 "Obtain control over" has its
"common meaning," as well as other definitions that do not apply in this case.13
8 State v. Green, 94 Wash. 2d 216, 221-22, 616 P.2d 628 (1980).
9 State v. Thomas, 150 Wash. 2d 821, 874-75, 83 P.3d 970 (2004).
10 State v. Homan, 181 Wash. 2d 102, 106, 330 P.3d 182 (2014).
11 State v. Rich, 184 Wash. 2d 897, 903, 365 P.3d 746 (2016).
12RCW9A.56.020(1)(b).
13RCW9A.56.010(10).
No. 74008-3-1/6
We focus on the word "obtain." According to the American Heritage
Dictionary, "obtain" means "[t]o succeed in gaining possession of as the result of
planning or endeavor; acquire."14
Here, McKinnon's deception involved misrepresenting the location of the
funds he removed from the association's accounts. In its oral ruling, the court
found:
the deception that I saw in this case had to do with essentially the
hiding of the assets. The assets were not couched as a loan to Mr.
McKinnon in this case. They were described as being securely
invested; that is the deception that I see in this case.[15]
But there is no evidence that McKinnon used this deception to obtain
control over the association's funds.
The association hired McKinnon in 2006. He first deceived the
association in a report sent in December 2007. Thus, McKinnon had control over
the association's funds before he deceived them. Accordingly, he did not use
deception to obtain control over the funds.
McKinnon used deception to hide the fact that he was misappropriating
the association's funds. But this is insufficient to establish theft by deception.
The statute's plain language requires that the defendant use deception to "obtain
control over" the property.16 Here, McKinnon did not use deception to obtain
14 The American Heritage Dictionary (5th ed. 2016)
https://ahdictionary.com/word/search. html?q=obtain.
15 Report of Proceedings (July 8, 2015) at 4.
16RCW9A.56.020(1)(b).
No. 74008-3-1/7
control of the funds. Rather, he already had control of the funds and used
deception to retain control.
A leading treatise supports this interpretation: "The difference between
theft by deception and embezzlement lies in whether the defendant had lawful
possession of the property prior to the theft."17 Ifthe defendant had lawful
possession before the theft, then he cannot be guilty of theft by deception.18
Here, McKinnon initially had lawful possession of the association's funds.
Although he misappropriated the funds, and attempted to hide his
misappropriation, this deception did not convert his embezzlement into theft by
deception.
Case law also supports this conclusion. In State v. Smith, the supreme
court interpreted a previous version of the theft statute, then known as larceny.19
That statute, like the present theft statute, had embezzlement and theft by
deception as alternate means of committing the same offense.20 The elements
of the different means have not materially changed—RCW 9A.56.020 merely
rephrases and reorganizes the previous statute.21
1713B Seth A. Fine and Douglas J. Ende Washington Practice: Criminal
Law § 2608 at 137 (2015-2016 ed.).
18 jd,
192Wn.2d 118, 98 P.2d 647 (1939).
20 Southard, 49 Wash. App. at 62 n.2; Rem. Rev. Stat. § 2601.
21 Id.
No. 74008-3-1/8
In Smith, Bian Smith managed a business.22 In this role, "he had
complete control of all the business of the company, including the bank deposits"
and was the only person authorized to write checks from the company's
accounts.23 He used funds in the company's account to purchase various
personal investments.24 To do this, Smith wrote checks that his codefendant
cashed.25 To hide these transactions, Smith would place personal checks in his
codefendant's name payable to the company in the company's cash box.26
The State charged Smith with larceny, but not under the means of
embezzlement.27
The supreme court distinguished embezzlement from other means of
committing theft:
"In embezzlement, the property comes lawfully into the possession
of the taker and is fraudulently or unlawfully appropriated by him; in
[other means of theft], there is a trespass in the unlawful taking of
the property. Embezzlement contains no ingredients of trespass,
which is essential to constitute the [other means of theft].
Moreover, embezzlement does not imply a criminal intent at the
time of the original receipt of the property, whereas in [other means]
the criminal intent must exist at the time of the taking."t28'
22 Smith, 2Wn.2dat119.
23 Id, at 119-20.
24 Id, at 120.
25 Id
26 Id,
27 id, at 121.
28 ]d, (quoting 18 Am. Jur.. Embezzlement, § 3. p. 572).
8
No. 74008-3-1/9
The court determined that Smith had the funds lawfully in his possession
before he wrongfully appropriated them.29 Thus, he was guilty only of
embezzlement and not of another means of theft.30 Accordingly, the court
reversed his conviction.31
Similarly, in State v. Renhard, the supreme court reversed Marcus
Renhard's conviction for larceny by deception.32 Renhard was the president of a
corporation.33 He used two corporate checks for his personal use.34 Both
Renhard and a secretary had to sign the corporation's checks.35 But the
secretary's signature was only a precaution against forgery—the secretary had
no authority to refuse to sign a check.36
The State's evidence showed that Renhard informed the secretary that the
checks were to purchase equipment for the corporation.37 But he instead used
them to purchase personal property.38
29 jd, at 122.
30 id,
31 id, at 127.
32 71 Wash. 2d 670, 674, 430 P.2d 557 (1967).
33 id, at 670-71.
34 id, at 671.
35 id,
36 id,
37 id,
38 Id.
No. 74008-3-1/10
The court held that insufficient evidence supported Renhard's conviction
for larceny by deception. The court held that the State failed to prove that
Renhard's deception was necessary to obtain the funds. The court also held that
Renhard "had lawful control of the funds of the corporation, and these checks
were, in effect, drawn by him."39 Thus, larceny by embezzlement was "the only
section [of the larceny statute] applicable to the facts of this case."40
In contrast, in State v. Johnson, the supreme court upheld Francis
Johnson's conviction for larceny by deception.41 In that case, Johnson's
codefendant was an insurance adjuster.42 The adjuster would create false claim
files and authorize payment for the claims.43 Then Johnson would cash the
insurance checks and share the proceeds with his codefendant.44
On appeal, Johnson argued that he had committed only embezzlement,
not theft by deception, because his codefendant lawfully possessed the funds.45
The supreme court disagreed, distinguishing Smith.46
39 id, at 672.
40 id, at 673.
41 56 Wash. 2d 700, 355 P.2d 13 (1960).
42 id, at 703.
43 id,
44 Id, at 704.
45 Id, at 705.
46 Id. at 704-05.
10
No. 74008-3-1/11
The supreme court held that the insurance adjuster had the authority "only
to order the payment of the company's funds."47 This authority was not the
equivalent to possessing the funds. Other employees possessed the funds, and
the adjuster did not possess them until the other employees executed the
payments he ordered.48 Thus, Smith was distinguishable, and Johnson was
properly convicted of larceny by deception.49
Here, McKinnon's case is analogous to Smith and Renhard. As the
association's accountant, McKinnon had lawful possession of the association's
funds. McKinnon would use the funds to pay the association's bills and had the
authority to pay himself. Although McKinnon misappropriated the funds to his
personal use, he had lawful possession when he did so. Thus, just as in Smith
and Renhard, McKinnon committed only the crime of embezzlement. The
evidence does not support a conviction for theft by deception.
McKinnon's case is also distinguishable from Johnson. In Johnson, the
insurance agent did not have possession of the funds. He obtained the funds by
falsifying insurance files to get his coworkers to execute payments. Thus, it was
clear that the insurance agent used deception to obtain the funds.
Here, the State failed to prove such a link between McKinnon's deception
and the association's funds. If McKinnon had requested and obtained additional
funds from the association after falsely claiming that an unexpected cost arose,
47 id, at 705.
48 id,
49 Id.
11
No. 74008-3-1/12
he would have been guilty of theft by deception. Similarly, if McKinnon had
falsely informed the association's members that their dues had increased and
obtained additional funds, he would have been guilty of theft by deception. But
here, the State failed to establish that McKinnon used deception to obtain control
over additional funds. Instead, the evidence shows only that McKinnon used
deception to hide his misuse of the funds that he already controlled.
The State relies on State v. Mehrabian50 to argue that sufficient evidence
supports McKinnon's conviction. But that case is distinguishable.
In Mehrabian, Sassan Mehrabian worked for the City of Woodinville as its
information technology manager.51 His responsibilities included purchasing the
city's computer equipment.52 When purchasing equipment, Mehrabian was
required to obtain three bids for the equipment and present the lowest bid to his
supervisors for approval.53
Mehrabian also owned a computer equipment business.54 The city
prohibited its employees from engaging in business with the city.55 Despite this
prohibition, Mehrabian sold equipment to the city, using a third party vendor to
50 175 Wash. App. 678, 308 P.3d 660 (2013).
51 id, at 683.
52 id, at 701.
53 id, at 684.
54 id,
55 id,
12
No. 74008-3-1/13
invoice his sales.56 Mehrabian sold the equipment to the city at substantial
markups and often delivered equipment that was inferior to the invoice his
supervisors approved.57 Mehrabian also forged price quotations to obtain his
supervisors' approval.58 And on some occasions, Mehrabian forged invoices
from the third party vendor, charging the city without delivering any equipment.59
The State charged Mehrabian with theft by deception after the city
discovered the discrepancies in its computer equipment inventory.60
On appeal, Mehrabian argued that insufficient evidence supported his
convictions.61 Specifically, he argued that the State had not proven that the city
relied on his misrepresentations when it purchased the equipment.62 This court
disagreed, noting:
Neither [of Mehrabian's supervisors] knew they were approving
business deals with Mehrabian, and both said they probably would
not have approved the deals had they known the true facts.
Neither [supervisor] knew Mehrabian was enriching himself through
these transactions, and both supervisors testified he did not have
permission to do so ... .
Mehrabian induced the City to pay out money by color or aid of
deception: He purchased property himself, invoiced the City
56
id.
57
id.
58
id.
59
Id,
60
14
61
14 at 699.
62
Id.
13
No. 74008-3-1/14
through [the third party vendor] at a substantial markup, invented
price quotes, forged invoices, delivered an inferior product or failed
altogether to deliver the purchased property, and enriched himself
through the transactions. He created the impression that he was
legitimately engaging in business with another company for the
purchase and delivery of computer products. That false impression
caused the City to engage in business it would not otherwise have
undertaken.[63]
Mehrabian is not analogous to McKinnon's case. In Mehrabian, it was
clear that Mehrabian was "obtaining control" over the funds through deception.
He would provide forged price quotations to his supervisors and then the
equipment would be purchased with his supervisor's credit card.64 Prior to the
deception, he did not have control over the city's funds. Thus, he used deception
to obtain the funds.
The only question on appeal was whether Mehrabian obtained these
funds because the city relied on his deception or whether the city would have
purchased these items regardless of his deception.65 The court determined that
there was sufficient evidence that the city relied on his deception.66
Thus, McKinnon's case is distinguishable. As explained earlier, the State
failed to show that McKinnon used deception to obtain control over the
association's funds. Accordingly, Mehrabian is not helpful.
63 id, at 707-08.
64 id, at 703-04.
65 id, at 699, 707-08.
66 Id. at 707.
14
No. 74008-3-1/15
The State also argues that McKinnon obtained control over the
association's funds under the definition found in RCW 9A.56.010(10). That
statute provides: "'Obtain control over' in addition to its common meaning,
means: (a) In relation to property, to bring about a transfer or purported transfer
to the obtainer or another of a legally recognized interest in the property."67
The State argues that McKinnon's "unauthorized transfer of [the
association's] reserve funds into his own personal account created a legally
recognized interest that he alone exclusively controlled."68 This argument is
untenable.
Black's Law Dictionary defines a legal interest as "[a] legal share in
something; all or part of a legal or equitable claim to or right in property 126 Wash. 2d 315, 323, 893 P.2d 629 (1995).
16