Opinion
No. 2-570 / 01-0720
Filed October 30, 2002
Appeal from the Iowa District Court for Woodbury County, Gary E. Wenell, Judge.
Phyllis Wax appeals her convictions and sentences for first-degree theft, two counts of income tax evasion, and second-degree fraudulent practices in violation of Iowa Code sections 714.1(1), 714.2(1), 422.25(8), 422.25(5), 714.8(10) and 714.9 (1999). AFFIRMED.
Linda Del Gallo, State Appellate Defender, and Tricia A. Johnston, Assistant State Appellate Defender, for appellant.
Thomas J. Miller, Attorney General, Martha E. Boesen, Assistant Attorney General, Thomas S. Mullin, County Attorney, and Mark Campbell, Assistant County Attorney, for appellee.
Heard by Vogel, P.J., and Zimmer and Eisenhauer, JJ.
Phyllis Wax appeals her convictions and sentences for first-degree theft, two counts of income tax evasion, and second-degree fraudulent practices in violation of Iowa Code sections 714.1(1), 714.2(1), 422.25(8), 422.25(5), 714.8(10) and 714.9 (1999). We affirm.
I. Background facts and proceedings.
While investigating complaints from utility customers, Sergeant Bluff city councilwoman Cathy Bishop discovered a number of discrepancies in the city's closing reports, cash payments journal, and deposit slips. In particular, she discovered that various cash payments had been made to the city, but no cash had been deposited into the city's account. The investigation began in the city clerk's office, where Phyllis Wax was employed as the city clerk, and had such duties as preparing the monthly utility reports and taking deposits to the bank. That investigation revealed that on numerous occasions cash that was reportedly received by the city was not deposited in its account, and that frequently cash deposits from unknown sources were made into Wax's personal accounts within days following the time such cash deposits should have appeared on the city's account.
Based on the results of the investigation, the State charged Wax with first-degree theft, first-degree fraudulent practices, and three counts of income tax evasion. Following a bench trial, the court found her guilty of first-degree theft, two counts of tax evasion, and the lesser offense of second-degree fraudulent practices. The court sentenced her to indeterminate terms of ten years for theft and five years on each of the tax evasion and fraudulent practices counts, which it ordered to be run concurrently. It also fined her $1000 on the theft conviction and $750 on the remaining counts. All fines and terms of imprisonment were suspended. Wax appeals.
II. Sufficiency of the evidence.
Wax first contends the evidence was insufficient to support any of the convictions. We review challenges to the sufficiency of evidence for errors at law. State v. Chang, 587 N.W.2d 459, 462 (Iowa 1998). We review a trial court's findings in a jury-waived case as we would a jury verdict. State v. Weaver, 608 N.W.2d 797, 803 (Iowa 2000). If the verdict is supported by substantial evidence, we will affirm. State v. Torres, 495 N.W.2d 678, 681 (Iowa 1993). We view the record evidence in the light most favorable to the State to determine whether the evidence is such that could convince a rational fact finder the defendant is guilty beyond a reasonable doubt. Id.
To support the first-degree theft conviction, the State was required to prove Wax: (1) took possession of money belonging to Sergeant Bluff, (2) had the intent to deprive Sergeant Bluff of the money, (3) at the time of the taking the money was in the possession of Sergeant Bluff, and (4) the amount exceeded $10,000. See Iowa Code §§ 714.1(1), 714.2(1). Upon our review of the record, we conclude substantial evidence supports the court's finding Wax committed first-degree theft.
During the time frame covered by the investigation, Wax was the city clerk, and tasked with preparing monthly reports and taking deposits to the bank. Although other employees of the clerk's office also filled out the deposit slips, numerous slips were signed by Wax. Many of those particular deposit slips did not record any cash being deposited into the city's accounts.
At trial, the State introduced an exhibit that compiled the utility department's closing reports divided between cash and check payments, the date the statement was created, and the amount of cash and checks subsequently deposited into the city's bank account. That exhibit showed multiple occasions when both cash and check payments were made to the city, but when deposits were made into the city's accounts, only check deposits were made. Further, evidence was presented that on multiple occasions, Wax deposited cash into her various checking accounts on dates substantially close in time to when the cash was found not to have been deposited into the city's accounts, and in amounts that were always rounded to a whole number and substantially similar to those missing cash payments. Those transactions show approximately $22,000 in cash deposited in Wax's accounts from unknown sources.
As an example, on August 12, 1998, cash payments were made to the city totaling $965.36; however, the city's August 13 deposit slip shows no cash was deposited into the city's account. On August 13, Wax deposited $900 in cash into her Sioux Valley Credit Union account. Based on the carefully documented evidence revealing a similar pattern of missing cash in the bank's deposit, coinciding with similar cash deposits in Wax's bank accounts, we conclude substantial evidence supports the district court's conclusion Wax committed first-degree theft.
In addition, we conclude substantial evidence supports the court's findings Wax committed two counts of income tax evasion and one count of fraudulent practices. As noted above, Wax failed to deposit various cash deposits made to Sergeant Bluff, and instead deposited portions of that money into her own personal bank accounts. Wax's income tax returns from 1998 and 1999, however, did not include those substantial cash amounts that were deposited into her accounts from otherwise unknown sources. Thus, by not reporting that income, substantial evidence supports she attempted to willfully evade paying a tax, and her convictions on two counts of income tax evasion must stand. See Iowa Code § 422.5(8). Likewise, substantial evidence supports that Wax committed a fraudulent practice in that she made a false tax return and willfully failed to pay taxes on her unreported income. See Iowa Code §§ 422.25, 714.10.
III. Merger .
Wax next contends the district court erred in failing to merge the tax evasion convictions with the fraudulent practices conviction. Because she claims a violation of Iowa Code section 701.9 (2001), our review is on error. State v. Finnel, 515 N.W.2d 41, 43 (Iowa 1994).
Tax evasion under Iowa Code § 422.25(8) is defined as: "A person . . . who willfully attempts in any manner to defeat or evade a tax imposed by this division or the payment of the tax . . ."
Fraudulent practices under Iowa Code § 422.25(5) is defined as: "A person . . . required to supply information [or] pay tax . . . who willfully makes a false or fraudulent return, or willfully fails to pay the tax, [or] supply the information . . ."
Iowa Code section 701.9 requires the sentencing court to merge lesser included offenses:
No person shall be convicted of a public offense which is necessarily included in another public offense of which the person is convicted. If the jury returns a verdict of guilty of more than one offense and such verdict conflicts with this section, the court shall enter judgment of guilty of the greater of the offenses only.
Iowa Code § 701.9. This provision is a statutory implementation of, and is coterminous with, the protection against former jeopardy guaranteed by the fifth amendment of the United States Constitution. State v. Halliburton, 539 N.W.2d 339, 344 (Iowa 1995).
Wax argues her tax evasion and fraudulent practices convictions penalized the exact same conduct as it was not possible for her to commit a fraudulent practice under Iowa Code § 422.25(5) without "attempting to defeat or evade the payment of the tax", which is tax evasion under section 422.25(8). We agree, under the specific facts of this case, the same conduct violated both statutes.
When the same conduct violates multiple code sections, our analysis focuses on whether the legislature intended to authorize cumulative punishment for the same conduct. See State v. Reed, 616 N.W.2d 327, 336 (Iowa 2000). If so, a single prosecution can, without violating double jeopardy, result in multiple punishments. State v. Perez, 563 N.W.2d 625, 627 (Iowa 1997). Accordingly, the question becomes what punishments the legislature intended to impose for separate statutory violations. State v. McKettrick, 480 N.W.2d 52, 57 (Iowa 1992).
Under Iowa Code section 422.25 we are persuaded that the legislature intended the offenses of fraudulent practices and tax evasion, even if occasioned by the same conduct, to be punished cumulatively. Reed, 618 N.W.2d at 336. The two code sections reflect differing purposes. Id. at 336. The plain language of the separate subsections reveals tax evasion targets various forms of conduct one can engage in to attempt to defeat or evade the tax, whereas fraudulent practices is occasioned by the actual failure to pay a tax or file the tax return. From "the face of the statute," we believe the legislature was clearly aware it was creating two statutes that proscribed separate acts which could be met by the same conduct, served differing purposes, and imposed cumulative punishment. Id. at 336.
Furthermore, in determining degrees of guilt for fraudulent practices offenses, the legislature has established a graduated scale of penalties from a simple misdemeanor to a class "C" felony, depending upon the amount of money involved. See Iowa Code §§ 714.9,13. However, tax evasion, regardless of the amount of money involved, is punished as a class "D" felony. Iowa Code § 422.25(8). This is further evidence the legislature intended different and separate punishment for the violations of these separate subsections. See Perez, 563 N.W.2d at 628. As the State notes, accepting Wax's merger argument would result, under certain scenarios, in the merger of a class "D" felony tax evasion with a simple misdemeanor fraudulent practices.
Based on these considerations, we conclude the legislature indeed intended cumulative punishments under these separate subsections of Iowa Code section 422.25. The district court therefore did not err in failing to merge the convictions.