Opinion
H043571
11-14-2017
THE PEOPLE, Plaintiff and Respondent, v. JOSEPH MORSE, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. CC828826)
Defendant Joseph Morse pleaded no contest to conspiracy to commit grand theft and commercial bribery, and was ordered to pay $1 million in restitution to his employer, Waste Management of California, Inc. (Waste Management), as partial compensation for its $10.3 million loss. Defendant argues that the trial court abused its discretion by holding him accountable for $1 million of Waste Management's loss without a factual or rational basis. For the reasons stated here, we will affirm the order.
I. BACKGROUND
Kirby Canyon Landfill is a landfill in Santa Clara County owned by Waste Management. Defendant was the district manager overseeing the landfill, and he and several subordinate employees were involved in a scheme to defraud their employer by allowing a customer, Resources Development Services (RDS), to dump its waste at the landfill without payment, or with payment reflecting a misclassified reduced rate. In exchange for failing to properly account for the waste dumped by RDS, defendant and other Waste Management employees accepted bribes from the owner of RDS, James Lucero.
Defendant, three subordinate Waste Management employees, and Lucero were convicted of conspiracy to commit grand theft (Pen. Code, §§ 182, subd. (a)(1); 484-487 subd. (b)(3)) and commercial bribery (Pen. Code, § 641.3) alleged to have occurred between January 2006 and May 2008, pursuant to negotiated dispositions. Defendant admitted overt acts in furtherance of the conspiracy, including accepting bribes from Lucero in exchange for looking the other way and failing to report the unlawful activities to Waste Management. He also admitted the sentencing enhancement that the victim's loss attributable to the conspiracy exceeded $3,200,000. (Pen. Code, § 12022.6, subd. (a)(4).) Defendant signed a waiver of rights from, which stated, "I understand the Court will order me to pay restitution to any victim(s) for his/her/their losses."
A fifth Waste Management employee was also charged, but passed away at some point during the trial court proceedings. --------
In December 2008, before arrest warrants were issued, a consulting firm hired by Waste Management (Wilson Consulting) calculated loss at approximately $13 million. Defendant presented expert testimony at a restitution hearing disputing that amount. He asked that he not be held liable for the full amount because of personal circumstances, because he did not encourage his subordinates to participate in the fraud, and because there was no evidence showing that he knew the extent of Waste Management's loss.
In a written order, the court set restitution in the case at $10.3 million, an amount defendant does not challenge here. Lucero was ordered to make restitution in the full amount, jointly and severally with all defendants. Defendant was ordered to pay restitution in the amount of $1 million, also jointly and severally with all defendants. The subordinate employee defendants were ordered to pay lesser amounts corresponding to the bribe money each received. In determining defendant's restitution obligation, the court identified defendant as "the highest ranking manager" at the landfill "and the person who should have exhibited the highest degree of loyalty to his employer and set a good example for the other employees under his supervision." While recognizing that the exact amount of bribes was "difficult to ascertain from the evidence presented," it based the $1 million figure on the total number of bribes paid to him and the other employees under his supervision, including unrecorded cash payments.
II. DISCUSSION
Defendant argues that the restitution order lacks any factual or rational basis because it reflects a misunderstanding of defendant's role in the fraud scheme, it miscalculates the amount of money defendant received in bribes, and it inflates roughly $30,000 in bribes (which in defendant's view is the amount of bribe money he received that is supported by the record) to $1 million.
"[I]n every case in which a victim has suffered economic loss as a result of the defendant's conduct, the court shall require that the defendant make restitution to the victim ... based on the amount of loss claimed by the victim or victims or any other showing to the court." (Pen. Code, § 1202.4, subd. (f).) While there is no requirement that the restitution award "be limited to the exact amount of the loss in which the defendant is actually found culpable" (People v. Carbajal (1995) 10 Cal.4th 1114, 1121), the amount of restitution must be factually supported and rational. (Id. at p. 1125.) A trial court's restitution order is reviewed for abuse of discretion. (People v. Giordano (2007) 42 Cal.4th 644, 663.) We examine " 'whether the ruling in question "falls outside the bounds of reason" under the applicable law and the relevant facts [citation].' " (Ibid.)
Defendant overlooks that restitution was imposed under Penal Code section 1202.4, subdivision (f) to make his employer whole for the fraud perpetrated by the conspiracy for which he was convicted. Under the version of section 1202.4 in effect at the time of sentencing, full restitution was contemplated absent "compelling and extraordinary reasons." (Former Pen. Code, § 1202.4, subd. (g).) Defendant did not argue in the trial court any compelling and extraordinary reason for being relieved from paying the full $10.3 million restitution, and on this record we can only view the decision to impose a $1 million restitution obligation as an act of clemency.
The restitution order is not based on any misunderstanding of defendant's role in the fraud scheme. The order correctly describes defendant as the district manager at the landfill, and accurately summarizes the charges against him as "[taking] bribes from defendant Lucero in exchange for looking the other way and failing to report the unticketed and misclassified load fraud to Waste Management." The order acknowledges "interviews with employees and statements of some of the defendants" establishing that Lucero had made cash payments to the employee defendants that were "not captured in any form that can be used to determine an exact amount." That observation is consistent with defendant's statement to the probation officer, made in the presence of his attorney, that he received approximately $50,000 to $60,000 during the relevant time period.
Defendant casts primary culpability on Lucero and the codefendant onsite manager at the landfill, and presses that the other codefendant employees were not under his direct supervision and did not know of his involvement in the scheme, so he "did not set a bad example for the employees, as the court's order states." But the court did not base its order on the subordinate employees having a subjective awareness of defendant's involvement in the fraud scheme. The court relied on the fact that defendant was "the highest ranking manager" involved in the fraud scheme. Defendant's conduct was egregious because that position should have instilled the highest degree of loyalty to his employer, impelling him to reject and report the scheme. That is a rational basis on which to impose liability for the ill-gotten gains received by him and his subordinate employees, regardless of whether his subordinates reported to him directly or to a middle manager. Defendant's decision to remain ignorant of the day-to-day fraudulent transactions taking place at the landfill is not a compelling and extraordinary reason for excusing his liability.
In our view, the trial court acted reasonably and rationally by setting defendant's restitution liability at an amount that roughly reflected the collective amount of bribes paid as a starting point for that liability. The Wilson Consulting report calculated the bribes paid at $865,396, and the trial court reasonably increased that amount to $1 million recognizing that additional cash payments were not captured in that figure. Defendant himself estimated that he received between $50,000 and $60,000 in bribes, but even if he received less or received some of that money outside the time period alleged in the information, the $1 million obligation is rational and supported by the record. Defendant was complicit and instrumental in the fraud scheme, and his restitution liability amounts to less than 10 percent of the victim's loss.
III. DISPOSITION
The order is affirmed.
/s/_________
Grover, J.
WE CONCUR:
/s/_________
Premo, Acting P. J. /s/_________
Elia, J.