Opinion
D075772
03-03-2020
THE PEOPLE, Plaintiff and Respondent, v. LEONARD DARRYL WHATLEY, JR., Defendant and Appellant.
Ava R. Stralla, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Lance E. Winters, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Melissa Mandel and Stephanie H. Chow, Deputy Attorneys General, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. SCD255508) APPEAL from a judgment of the Superior Court of San Diego County, Esteban Hernandez, Judge. Affirmed. Ava R. Stralla, under appointment by the Court of Appeal, for Defendant and Appellant. Xavier Becerra, Attorney General, Lance E. Winters, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Melissa Mandel and Stephanie H. Chow, Deputy Attorneys General, for Plaintiff and Respondent.
The San Diego County Grand Jury indicted Leonard Darryl Whatley, Jr. for multiple offenses arising from his work as a contractor. The indictment included one count of worker's compensation fraud (Ins. Code, § 11880, subd. (a); counts 1 and 2); failure to file a timely unemployment tax return (Unemp. Ins. Code, § 2117.5; count 3); failure to pay tax (Unemp. Ins. Code, § 2118.5; count 4); and two counts of grand theft from an elder adult in excess of $950 (Pen. Code, § 368, subd. (d); counts 5 and 7); and two counts of grand theft in excess of $950 (§ 487, subd. (a); counts 6 and 8).
All further statutory references are to the Penal Code unless otherwise specified.
Whatley pleaded guilty to one count of unemployment insurance fraud (count 1) and one count of failure to pay taxes (count 4). The parties agreed Whatley would receive five years formal probation and stipulated to the amounts of money Whatley must pay to the State Compensation Insurance Fund and to the Employment Development Department. Whatley gave a Harvey waiver. The remaining charges and allegations were dismissed. Whatley was granted probation as contemplated by the plea agreement.
A Harvey waiver is based on People v. Harvey (1979) 25 Cal.3d 754. The waiver permits the trial court to consider the dismissed charges and enhancements in determining the proper sentence for the admitted offenses. The waiver permits the court to order restitution for losses missing from the conduct in the dismissed counts. --------
The trial court held an evidentiary hearing on the prosecution's request for restitution to the victim of the elder abuse and theft charges, M.K. At the conclusion of the hearing, the court ordered Whatley to pay the victim $159,350 in restitution for economic losses which resulted from Whatley's criminal conduct.
Whatley appeals citing the evidence in the light most favorable to his position and drawing all inferences in his own favor. He argues the court was arbitrary in rejecting his version of the events and that there is not sufficient evidence to support the trial court's decision.
After an extensive hearing and the consideration of all the evidence, the court found Whatley was not a credible witness and rejected his version of the events and accepted the prosecution evidence of the losses at issue. We will reject Whatley's arguments and affirm the trial court's order.
STATEMENT OF FACTS
The evidence was extensive. The respondent's brief contains an accurate summary of the facts. We will incorporate it here for convenience.
A. Prosecution Evidence
M.K. met Whatley when Whatley helped work on his La Jolla home. M.K. encouraged Whatley to get his contractor's license and start his own business. After getting his contractor's license, Whatley suggested M.K. buy two properties in San Diego to fix up and rent out as apartments: one at 320 22nd Street (320 Property), containing two units, and one at 358 22nd Street (358 Property), containing four units. M.K. bought the properties on Whatley's advice and contracted with Whatley to do the work on the properties.
On recommendation of his financial advisor M.K. set up a fund control with Dixieline Builders Fund Control (Dixieline), a licensed escrow company. M.K. deposited money for construction with Dixieline and then Dixieline disbursed money on a written order for the improvement of a particular property. Typically for these types of accounts, at the time of project setup, there is an agreement between the parties with a cost breakdown or budget by category (i.e. framing, plumbing, electrical) that will be the base for each request. During the project, money is requested out of specific categories. A person seeking to be paid from the fund must fill out a voucher form to be signed by an authorized person and submit it with documentation to support the payment, such as receipts or invoices. Payment is given in the form of a check or direct deposit to the requestor.
Whatley would have M.K. sign vouchers for a certain monetary amount for each item purchased for the projects, and take the signed vouchers to Dixieline for the funds to be released to him. Whatley often arrived close to the end of the business day and pushed M.K. to sign a number of authorizations without giving him time to review them, telling M.K. that he needed to get the funds from Dixieline before closing so he could pay the workers. Whatley was supposed to provide M.K. with copies of invoices and receipts, but after the first few invoices, Whatley never provided any copies, stating that he left them in his car or at home.
By the end of 2012, the projects were two years past the projected six month completion timeframe. In December 2012, M.K. was scheduled to leave for Japan for two to three weeks around Christmas. Whatley asked for $45,000 to finish the jobs while M.K. was away. The morning that M.K. was leaving, Whatley came late to give M.K. a ride to the airport and brought a number of papers for him to sign. M.K., worried that he would miss his flight, signed the papers and left for Japan, hoping to get the projects completed. When he returned, no additional work had been done and the $45,000 was gone. Whatley requested another $10,000 to finish the work. At that point, M.K. sought help from others to look into Whatley's activities on the properties and spending. Whatley never completed the work on any of the properties.
Steve K., a friend of M.K.'s, worked for a company preparing cost estimates for steel construction before he retired. He assisted M.K. by examining the Dixieline books and accounts and preparing a document listing discrepancies M.K. identified in the accounts. M.K. testified that the list contained the items and amounts that he did not authorize Whatley to obtain. Whatley took $3,000 from the account for carpet for the 320 Property, but that house did not have any carpet. Whatley took $8,000 from the account for asphalt, but there was no asphalt at the property. Whatley took $11,831 out of the account for kitchen cabinets for the 358 Property, but there were no kitchen cabinets at all in the property. M.K. later had to pay an additional $9,300 to install kitchen cabinets. Whatley also purchased $4,190.32 worth of construction tools with funds from the construction account, for example, a table saw, but did not return the tools to M.K.
Whatley also obtained $17,000 for a contractor's fee, which was in addition to his contracted amount of $40,000. Whatley charged $6,000 for landscaping, though there was no landscaping work done at the work sites. Whatley billed $21,913 for "cleaning." Whatley hired a painter for $7,000 to paint the interiors. Whatley pulled out about $12,000 for painting, but only paid the painter $6,000. M.K. later had to pay the painter an additional $1,000.
Whatley took money out of the account to install three on-demand hot water heaters at the 320 Property. However, after tenants moved in and complained, Steve K. found there was a leaking water tank and no on-demand water heaters at the property. The cost to replace the leaking water tank with three on-demand water heaters was $5,967.
Whatley was responsible for all insurance and taxes. However, Whatley charged a total of $15,419.53 for insurance related to the 320 Property, $17,798.12 for insurance related to the 358 Property, and $2,000 for federal taxes related to the 358 Property. It was later discovered that Whatley had not been paying all of his insurance premiums or payroll taxes. Whatley was also responsible for gas unless he traveled over 25 miles for job-related purposes. There was a total charge of $3,389.95 for gas related to the property at 320, and $5,072.89 for gas related to the property at 358. Some of the same gas receipts were presented multiple times on different pages, and one gas receipt was from a gas pump in another city at 1:00 a.m. Some receipts showed that Whatley made a nominal purchase at Home Depot and took a larger amount of cash back, then took the receipt for the total amount to Dixieline for reimbursement.
Some of the invoices appeared unrelated to construction; for example, invoices for groceries from Albertson's, a picture hanging kit, a car headlight, and a flashlight and recharger. Whatley withdrew $3,500 twice to pay his mother, for a total of $7,000. When Steve K. asked, Whatley could not explain how his payments to his mother were related to the construction. Whatley also withdrew $350 to pay his wife.
M.K. also requested restitution for amounts that he gave or loaned Whatley directly from 2005 through 2010 for personal use. These were items not for construction on the properties; for example, down payment for Whatley's car and a trailer. The total amount requested for these personal items was $30,000.
M.K. and Steve K. also calculated losses due to the delay between the six month projected timeframe and the two years it took to complete the project. They calculated the loss in rent plus $1,000 per month for mortgage payments on the property. The total amount requested for unauthorized charges and construction delays for both properties was $273,727.23.
Cathy O., manager and president of Dixieline Builders Fund Control, was familiar with M.K.'s accounts. M.K. opened two accounts for two different properties with Dixieline; one from 2009 through 2011, and the other from 2011 through 2013. During the first project, Whatley sought disbursement of funds 21 times. During the second project, Whatley sought disbursement 73 times, which was more frequently than is typical.
Cathy O. got involved in fund disbursement for M.K.'s second project, which was unusual, because Dixieline had concerns with the sufficiency of Whatley's documentation to support his fund requests. Whatley would always come to the office at the end of the day when they were closing and submit fund requests. The documentation Whatley used was never in order, some papers and receipts were disheveled and looked as though he had picked them up off the ground in the parking lot. Whatley presented handwritten invoices and sometimes provided copies of checks as opposed to copies of canceled checks, which did not provide proof that the amount was actually paid. On occasion, Whatley would not have gotten the voucher form signed by M.K., so Dixieline would have to call M.K. for authorization. Cathy O. was so concerned with Whatley's manner in utilizing the fund that she determined Dixieline would not open another construction account with Whatley again in the future.
B. Defense Evidence
Whatley claimed he and M.K. had a romantic relationship, which M.K. denied. M.K. sometimes took Whatley and his family to cultural events, and bought Whatley's daughter a piano. Whatley often drove M.K. to medical visits and appointments. Whatley said that M.K. told him if they were married, M.K. could give him everything he had, but Whatley did not want that. Whatley tried to help M.K. find a partner on Match.com. Whatley believed that M.K. and Steve K. were in a dating relationship, but he had never seen them being intimate.
Whatley testified that he provided all the work and labor that he claimed he did, and discussed each of the disputed charges. Although he submitted a request for carpeting, he stated that he used the money to purchase hardwood or laminate for the properties, but neglected to change the bill that he presented to Dixieline. Whatley claimed he installed $12,808 of laminate flooring in the 320 Property, so he did not know why M.K. would claim $12,000 for flooring. There was no room for a dumpster at the construction site, so Whatley kept the dumpster at his home in Bonita. Whatley would take all of the trash and construction debris to his home to dump it. He charged for gas associated with driving back and forth to his house. Whatley's personal tools were stolen, so he purchased more tools with construction funds. Some of the tools he purchased to manufacture raw materials, and those tools were "used up," or destroyed. Whatley did landscaping in the form of weeding and cutting grass, and he used money from one account to pay for landscaping work done at all of M.K.'s properties. He said M.K. was aware of the work and approved it. Cleaning at the construction sites was constant and necessary, which is why it cost $21,913. The cost of cabinets went over budget because they paid two or three cabinet-makers who did not complete their jobs.
Whatley often paid his workers in cash from his personal account so they could be paid right away, and later sought reimbursement from vouchers from Dixieline. On occasion, he borrowed money from his mother or had his wife pay for things and later sought vouchers to reimburse them. He said he explained to M.K. what he was doing and M.K. approved.
Whatley did not purchase any on-demand water heaters. He told M.K. that the water heaters that were already on the property worked and they could save money by continuing to use them. He stated M.K. agreed that they did not need new water heaters. Whatley stated that he did use some asphalt, but not $8,000 worth and could not explain why he charged $8,000. He sometimes used money from the fund on something other than what it was stated it was for, but he used all money he received on one of M.K.'s projects.
Whatley asserted that M.K. was at fault for many construction delays. As an example, Whatley completed framing for a communal laundry room in the four unit building. Then M.K. changed his mind and stated that he wanted a laundry room in each unit, which required re-framing and added time and expense. There was one tenant in each of the two properties during construction. They paid a reduced rent because there was ongoing construction.
Catherine K., a forensic accountant, testified as an expert. She stated that the supporting documentation Whatley submitted with the vouchers were the types of documents she would expect to see on a construction project, i.e., receipts from Home Depot, Costco, and invoices from contractors. However, she did not examine the support documentation to see if all of the classifications were correct or total the receipts. Her review was limited to noting that there was some kind of supporting documentation provided with each voucher.
The accountant stated that the first project appeared to be under budget. The original proposed budget for 320 Property was $282,000, and the amount actually paid out from the Dixieline account was about $275,000. The accountant did not see any documentation on whether or how the $7,000 difference was returned to M.K. The proposed budget for the 358 Property was $308,000, and the total amount actually spent on the project was about $383,000. The accountant concluded that the total amount over the proposed budgets on both projects was about $68,000. She stated that although she did not have an opinion regarding whether cost overruns were appropriate in this case, cost overruns alone are not necessarily indicative of fraud or mismanagement. The accountant also stated it was possible that some of the items Whatley was paid for were not actually provided or performed.
C. Trial Court's Findings and Restitution Order
At the end of the hearing, M.K. requested $78,410 for unaccounted construction costs plus $91,350 in lost rent, for a total of $169,760. The rent requested was calculated at $1,695 per month for two two-bedroom units, and $1,350 for two one-bedroom units, over the course of 15 months for the delay beyond the six-month project estimate.
The trial court found Whatley not credible, and found that Whatley took advantage of his friendship with M.K. to get M.K. to authorize payments that he would not have otherwise, which constituted elder abuse. The court also found that Whatley was mainly at fault for the 15-month delay in completing the projects. The trial court awarded M.K. the $68,000 that Whatley's expert testified was the total amount over budget for construction at the two properties, plus $91,350 for fair market value of lost rents during the 15 months that the projects were delayed. The total amount of restitution ordered to M.K. was $159,350.
DISCUSSION
A. Legal Principles
We review the trial court's award of restitution under the abuse of discretion standard of review. (People v. Giordano (2007) 42 Cal.4th 644, 665.) The court's decision must have a rational factual basis for the amount awarded. (People v. Akins (2005) 128 Cal.App.4th 1376, 1382.) We must determine whether the court's decision is supported by substantial evidence. We do not reweigh the evidence or make credibility findings. (People v. Tabb (2009) 170 Cal.App.4th 1142, 1153.)
The amount of restitution ordered does not have to reflect exact amounts of the economic loss or reflect the amount of damages that would be awarded in a civil action. (People v. Millard (2009) 175 Cal.App.4th 7, 26-27 (Millard).) Once the victim establishes prima facie showing of the amount of economic loss, the burden shifts to the defendant to prove that the amount of loss is less than what the victim claims it to be. (People v. Taylor (2011) 197 Cal.App.4th 757, 761.)
B. Analysis
While there was contrary evidence offered by Whatley, such evidence does not require the trial court to believe it. Even if contrary evidence, if believed, would support a different result, such contrary evidence does not require us to overturn the judgment. (Millard, supra, 175 Cal.App.4th at p. 26.)
The resolution of the factual dispute about restitution in this case is dependent on credibility. Here, the trial court found Whatley was not credible. The court found the victim to be largely credible and also considered the evidence from Dixieline and the forensic accountant. Even if reasonable minds could differ in this case, the court's findings and conclusions were not arbitrary or capricious. Instead its decision was based on identifiable testimony which it found to be credible. There was no error in the calculation of the amount of the restitution order.
DISPOSITION
The judgment is affirmed.
HUFFMAN, J. WE CONCUR: McCONNELL, P. J. GUERRERO, J.