People v. Schrauben , 314 Mich. App. 181 ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
PEOPLE OF THE STATE OF MICHIGAN, FOR PUBLICATION
January 26, 2016
Plaintiff-Appellee/Cross-Appellant, 9:00 a.m.
v No. 323170
Ionia Circuit Court
MARTI J. SCHRAUBEN, LC No. 2012-015535-FH
Defendant-Appellant/Cross-
Appellee.
Before: MARKEY, P.J., and OWENS and RONAYNE KRAUSE, JJ.
OWENS, J.
Defendant appeals as of right his jury trial convictions of eight counts of uttering and
publishing, MCL 750.249, four counts of forgery, MCL 750.248, and four counts of a fraudulent
insurance act, MCL 500.4511. He was sentenced to serve nine months in jail for the forgery
convictions, 11 months in jail for the uttering and publishing convictions, and 16 months in
prison for the fraudulent insurance acts convictions. The jury also convicted defendant of one
count of conducting a criminal enterprise (CCE), MCL 750.159i(1), one count of receiving the
proceeds of a criminal enterprise (CCE proceeds), MCL 750.159i(3), and eight counts of
embezzlement, MCL 750.174, which the trial court dismissed when it granted defendant’s
motion for directed verdict of acquittal. Plaintiff cross-appeals the trial court’s order granting
defendant’s motion for directed verdict of acquittal. We affirm defendant’s convictions and
sentences and the trial court’s order granting defendant’s motion for directed verdict of acquittal.
Defendant and Michael Lehman jointly owned two funeral homes in Portland and Ionia,
where they sold prepaid funeral plans. In 2005, Lehman bought out defendant’s shares in the
business and defendant began to operate a country club. Lehman testified that he and his wife
discovered some financial irregularities after defendant left, but they did not give them much
consideration. In December 2007, defendant talked to Lehman about returning to work for the
funeral homes as an employee, which Lehman agreed to, but testified that defendant was not
allowed to have any direct financial responsibilities. According to Lehman, if a customer
arranged for a prepaid funeral plan with defendant, Lehman was to handle the transaction, which
included bank deposits. Lehman managed the Portland chapel while defendant worked at the
Ionia chapel.
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Lehman testified that after defendant had been working at the Ionia chapel for at least
two years, he learned defendant had been making deposits himself, which caused Lehman to
investigate further. Lehman discovered that customers who had intended to purchase prepaid
funeral plans had actually written checks to Schrauben Management, which was a holding
company for the country club owned by defendant and had nothing to do with the funeral home
business. In addition, several of the escrow accounts and insurance policies used to fund the
prepaid funerals had been paid out before the deaths of the individuals who had purchased those
plans. According to Lehman, his name was forged on checks originally made payable to the
funeral home and then signed over to Schrauben Management.
Defendant first argues on appeal that the trial court abused its discretion by denying
defendant’s motion for a new trial based on Lehman’s perjured testimony. We review the trial
court’s decision to deny defendant’s motion for a new trial for an abuse of discretion. People v
Cress, 468 Mich 678, 691; 664 NW2d 174 (2003).
The trial court held an evidentiary hearing to address the perjury allegations against
Lehman, where many inconsistencies in Lehman’s testimony were exposed. Defendant argues
that these inconsistencies show Lehman perjured himself and warrant a new trial. “It is well
settled that a conviction obtained through the knowing use of perjured testimony offends a
defendant’s due process protections guaranteed under the Fourteenth Amendment.” People v
Aceval, 282 Mich App 379, 389; 764 NW2d 285 (2009). “If a conviction is obtained through the
knowing use of perjured testimony, it ‘must be set aside if there is any reasonable likelihood that
the false testimony could have affected the judgment of the jury.’ ” Id., quoting United States v
Agurs, 427 US 97, 103; 96 S Ct 2392; 49 L Ed 2d 342 (1976).
Defendant does not explain how the prosecutor knowingly presented perjured testimony,
and, as the trial court found, there is no evidence that the prosecutor knew about the potential
perjury. Even if the prosecutor knowingly presented perjured testimony, the false testimony
likely would not have affected the judgment of the jury. While the inconsistencies exposed at
the evidentiary hearing certainly cast doubt on Lehman’s testimony at trial and raised questions
as to his involvement in the fraud, there was other evidence that implicated defendant’s guilt.
Specifically, the undersheriff discovered approximately 65 checks in the Schrauben Management
bank account, maintained by defendant, which came from funeral home clients or the insurance
companies. Information taken from defendant’s home computer, specifically the Quickbooks
program, matched the checks found in the Schrauben Management bank account. The manager
of defendant’s country club testified that she would often enter deposits into Quickbooks for
defendant, and large deposits were commonly allocated under “membership dues.” Evidence
showed that these large deposits coincided with the checks that were deposited into the
Schrauben Management bank account from the funeral home. Further, two funeral home clients
testified that they were directed by defendant to write a check to Schrauben Management when
they purchased prepaid funeral policies. The defense’s theory at trial was that Lehman was
giving the money to Schrauben to pay the debt he owed him for the buyout, but this does not
explain why defendant would direct two clients to write their checks to Schrauben Management.
Finally, defendant, not Lehman, was the one on trial, and even if the jury were aware that
Lehman was involved, it likely would not change the verdict against defendant.
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Additionally, although this Court has not specifically ruled on whether a defendant may
be entitled to a new trial irrespective of the prosecutor’s culpability, it has stated that “it is the
‘misconduct’s effect on the trial, not the blameworthiness of the prosecutor, [which] is the
crucial inquiry for due process purposes.’ ” Aceval, 282 Mich App at 390, quoting Smith v
Phillips, 455 US 209, 220 n 10; 102 S Ct 940; 71 L Ed 2d 78 (1982) (alteration in Aceval). The
focus “must be on the fairness of the trial, not on the prosecutor’s or the court’s culpability.” Id.Therefore, “a conviction will be reversed and a new trial will be ordered, but only if the tainted
evidence is material to the defendant’s guilt or punishment.” Id. at 389.
Defendant argues that the inconsistencies in Lehman’s testimony are material to
defendant’s guilt because they show that Lehman was the actual perpetrator. As discussed,
however, there was concrete evidence presented which implicated defendant, despite the level of
Lehman’s potential involvement. Although Lehman was a key witness at trial, the deposits into
the Schrauben Management bank account maintained by defendant and the records on
defendant’s home computer strongly implicated defendant, even without Lehman’s testimony.
Therefore, we conclude that the trial court did not abuse its discretion by denying defendant’s
motion for a new trial based on perjury.
Defendant next argues that trial counsel was ineffective for failing to introduce
exculpatory evidence and develop testimony that would have shown Lehman testified falsely.
“The denial of effective assistance of counsel is a mixed question of fact and constitutional law,
which are reviewed, respectively, for clear error and de novo.” People v Brown, 279 Mich App
116, 140; 755 NW2d 664 (2008).
Criminal defendants have a right to the effective assistance of counsel under the United
States and Michigan Constitutions. US Const, Am VI; Const 1963, art 1, § 20. However,
effective assistance of counsel is presumed, and the defendant bears a heavy burden of proving
otherwise. People v Vaughn, 491 Mich 642, 670; 821 NW2d 288 (2012). To establish that a
defendant’s trial counsel was ineffective, a defendant must show: (1) that counsel’s performance
fell below an objective standard of reasonableness under prevailing professional norms and (2)
that there is a reasonable probability that, but for counsel’s error, the result of the proceedings
would have been different. Strickland v Washington, 466 US 668, 694; 104 S Ct 2052; 80 L Ed
2d 674 (1984); see also Vaughn, 491 Mich at 669.
Defendant argues that trial counsel was ineffective for failing to introduce exculpatory
evidence and develop testimony regarding (1) the timing of Lloyd Dickinson’s death, which led
Lehman to discover defendant’s wrongdoing, and errors on Dickinson’s death certificate, (2) the
fact that Lehman testified that he confirmed defendant’s wrongdoing after visiting Independent
Bank, when the banking was actually conducted at Firstbank, and (3) the fact that Lehman never
filed claims for many clients that passed away before Lehman allegedly discovered the fraud,
despite testimony that he had a tracking mechanism to ensure that he was paid by the escrow
companies or the families. These alleged errors, however, do not show that trial counsel’s
performance fell below an objective standard of reasonableness. Trial counsel testified at the
evidentiary hearing that he chose to focus on what he felt were much-larger issues than
Dickinson’s claim and was unaware of the Firstbank account that the Lehmans had. Trial
counsel made it clear that, in hindsight, he could have highlighted other issues that cast doubt on
Lehman’s credibility, particularly the fact that Lehman never filed claims for other clients that
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had passed away before he discovered the fraud. However, we will not second-guess counsel’s
trial strategy or assess his competence with the benefit of hindsight. People v Horn, 279 Mich
App 31, 39; 755 NW2d 212 (2008). Defendant has failed to overcome the strong presumption
that his counsel’s trial strategy was sound, and therefore, has failed to prove that he received
ineffective assistance of counsel. Id.Defendant next argues that during her closing argument and rebuttal the prosecutor
suggested to the jury that defense counsel was attempting to purposefully mislead the jury.
Defendant forfeited this issue by failing to object at trial. People v Fyda, 288 Mich App 446,
460; 793 NW2d 712 (2010). Therefore, our review is for plain error affecting defendant’s
substantial rights. Id. at 460-461. “Reversal is warranted only when plain error resulted in the
conviction of an actually innocent defendant or seriously affected the fairness, integrity, or
public reputation of judicial proceedings.” Id. at 461.
Defendant specifically challenges the following statements made during the prosecutor’s
closing argument:
Mr. Hocking is a very skilled, excellent trial attorney. He’s an excellent
cross-examiner. He pulls things out of people and muddies up the water. And
that’s what we talk about when we are prosecutors. We say the defense attorney
is going to come and throw mud up on the wall, except we don’t use that word
when we talk amongst ourselves. Let’s see how muddy we can make this water so
the jury can’t really see what’s going on here. Let’s see what can we come up
with? How about this? How about that? How about the other thing? Does that
make sense? That’s what defense attorneys do. I know. I’m married to one. You
should be at our house sometimes. They would like you to—the Defense would
like you to believe that he was—that Mr. Lehman was conspiring with Mr.
Schrauben about this; that that was going to pay off the buyout amount. And it
happens to be around the same amount so they could make that argument.
[Emphasis added.]
Defendant also challenges the following statements made during the prosecutor’s rebuttal:
Ladies and gentlemen, I asked you before to render a guilty verdict for
each and every one of the counts that I have charged the defendant with. And I
will call Mr. Hocking a mud slinger and he’s really good at it. He’s very
convincing. He’s picking out every little thing that he could possibly think of that
would try and create reasonable doubt, but it just doesn’t make it. I want you to
look at the elements and the Judge is going to tell you, you can believe some
things from a witness, one witness and not others from that witness. But you have
to believe with [sic] to make my burden of proof, to find the defendant guilty is
the elements of the offenses. Were the elements proved beyond a reasonable
doubt? Not all this other stuff that he calls reasonable doubt. That’s for you to
make the call. I say it’s not. I say it’s mud. Thank you very much. I appreciate
your very good attention. [Emphasis added.]
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“Prosecutors are typically afforded great latitude regarding their arguments and conduct
at trial[,]” People v Unger, 278 Mich App 210, 236; 749 NW2d 272 (2008), but “may not
suggest that defense counsel is intentionally attempting to mislead the jury.” People v Watson,
245 Mich App 572, 592; 629 NW2d 411 (2001). Such an argument implies that defense counsel
does not believe his own client, which undermines the defendant’s presumption of innocence.
Fyda, 288 Mich App at 461.
In this case, the prosecutor’s argument that defense counsel is a “mud slinger” who “pulls
things out of people and muddies up the water,” suggests that defense counsel was distracting the
jury from the truth and deterring the jury from seeing the real issues. This argument is improper.
See, e.g, Watson, 245 Mich App at 592 (holding that the prosecutor exceeded the bounds of
proper argument by suggesting that defense counsel used “red herrings” to distract the jury from
the truth).
However, the trial court instructed the jury that the attorneys’ statements and arguments
were not evidence and we presume that jurors follow their instructions. Unger, 278 Mich App at
237. Further, reversal is not warranted because any prejudicial effect created by the improper
statements could have been alleviated by a timely objection and curative instruction. Id. at 238.
Defendant also argues that the cumulative effect of the earlier alleged errors denied him a
fair trial. To warrant reversal based on cumulative error, “the effect of the errors must have been
seriously prejudicial in order to warrant a finding that defendant was denied a fair trial.” People
v Knapp, 244 Mich App 361, 388; 624 NW2d 227 (2001). However, defendant only identified
one error involving the prosecutor’s improper argument, which could have been cured by a
timely objection. Therefore, reversal is not warranted.
Defendant next argues that the trial court erred by not imposing an intermediate sanction
for his fraudulent insurance act convictions. A trial court’s decision to depart from the
sentencing guidelines is reviewed for reasonableness. People v Lockridge, 498 Mich 358, 392;
870 NW2d 502 (2015).
Defendant’s appropriate sentence range for his fraudulent insurance acts convictions
entitled him to an intermediate sanction pursuant to MCL 769.34(4)(a), which provides,
(4) Intermediate sanctions shall be imposed under this chapter as follows:
(a) If the upper limit of the recommended minimum sentence range for a
defendant determined under the sentencing guidelines set forth in chapter XVII is
18 months or less, the court shall impose an intermediate sanction unless the
court states on the record a substantial and compelling reason to sentence the
individual to the jurisdiction of the department of corrections. An intermediate
sanction may include a jail term that does not exceed the upper limit of the
recommended minimum sentence range or 12 months, whichever is less.
[Emphasis added.]
Subsection (4)(a) requires the trial court to sentence defendant to an intermediate sanction
that does not include prison time, absent a substantial and compelling reason for departure. See
Lockridge, 498 Mich at 387 (stating that “shall” indicates a mandatory directive). However, our
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Supreme Court in Lockridge specifically stated that any part of MCL 769.34 that refers to the
guidelines as mandatory or refers to departures from the guidelines is severed or struck down.
Id. at 365 n 1 (“To the extent that any part of MCL 769.34 or another statute refers to use of the
sentencing guidelines as mandatory or refers to departures from the guidelines, that part or
statute is also severed or struck down as necessary.”). Accordingly, under Lockridge, a trial
court is no longer required to impose an intermediate sanction.
Consistent with the remedy explained in Lockridge, we replace the word “shall” in MCL
769.34(4)(a) with the word “may.” See id. at 391 (stating that to remove the mandatory directive
of MCL 769.34(2), the Court need only substitute the word “may” for “shall”). Additionally, we
strike down the requirement that a trial court must articulate substantial and compelling reasons
to depart from an intermediate sanction. See id. (stating that under MCL 769.34(3), a trial court
no longer needs to provide substantial and compelling reasons to depart from the applicable
guidelines range). Pursuant to the broad language of Lockridge, under subsection (4)(a), a trial
court may, but is no longer required to, impose an intermediate sanction if the upper limit of the
recommended minimum sentence range is 18 months or less.
In this case, defendant first argues that the trial court’s reasons for departing from an
intermediate sanction were not substantial and compelling. However, as discussed, this is no
longer a requirement following Lockridge.
Second, defendant argues that the trial court violated Alleyne v United States, 570 US
___; 133 S Ct 2152; 186 L Ed 2d 314 (2013), because the reasons used to justify an upward
departure from the statutorily mandated intermediate sanction were not based on facts found
beyond a reasonable doubt by the jury. However, because an intermediate sanction is no longer
mandated pursuant to Lockridge, defendant’s argument is without merit because Alleyne stands
for the proposition that any fact that increases a mandatory minimum sentence must be submitted
to the jury and found beyond a reasonable doubt. Alleyne, 570 US at ___; 133 S Ct at 2163.
This “does not mean that any fact that influences judicial discretion must be found by a jury.”
Id. Now, pursuant to Lockridge, a trial court has discretion to impose an intermediate sanction if
the upper limit of the recommended minimum sentence range is 18 months or less, but it is not
required to.
In this case, defendant’s recommended minimum sentence was zero to 17 months’
imprisonment. The trial court sentenced defendant to 16 months in prison, which is within the
range authorized by law. See Alleyne, 570 US at ___; 133 S Ct at 2163 (stating that a trial court
has discretion to sentence a defendant within the range authorized by law). Where a trial court
does not depart from the recommended minimum sentencing range, the minimum sentence must
be affirmed unless there was an error in scoring or the trial court relied on inaccurate
information. MCL 769.34(10).1 Defendant does not dispute that his sentence was within the
1
Notably, Lockridge did not alter or diminish MCL 769.34(10), which provides, in pertinent
part, “If a minimum sentence is within the appropriate guidelines sentence range, the court of
appeals shall affirm that sentence and shall not remand for resentencing absent an error in
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recommended minimum guidelines range, and he does not argue that the trial court relied on
inaccurate information or that there was an error in scoring the guidelines.2 Therefore, this Court
must affirm the sentence.
Finally, defendant argues that the trial court erred by assessing 10 points for Offense
Variable (OV) 4 for his uttering and publishing convictions. We review for clear error the trial
court’s factual determinations, which must be supported by a preponderance of the evidence.
People v Hardy, 494 Mich 430, 438; 835 NW2d 340 (2013). We review de novo whether the
factual determinations were sufficient to score OV 4. Id. See also People v Steanhouse, ___
Mich App ___; ___ NW2d ___ (2015); slip op at 19 (holding that because scoring the offense
variables remains relevant under Lockridge, the standards of review traditionally applied to the
trial court’s scoring of the offense variables remain viable).
OV 4 requires the trial court to determine whether a serious psychological injury
requiring professional treatment occurred to a victim. MCL 777.34(1)(a). The trial court may
assess 10 points “if the serious psychological injury may require professional treatment.” MCL
777.34(2). Defendant does not challenge the fact that Lehman, the victim, did not seek
professional treatment, but rather argues that Lehman’s psychological injury was not serious.
In this case, although the statement was not provided to this Court, defendant
acknowledges that Lehman indicated in a letter to the trial court that “the past three years have
been a struggle for him psychologically.” We have upheld a trial court’s assessment of 10 points
for OV 4 where the victim suffered “personality changes, anger, fright, or feelings of being hurt,
unsafe, or violated.” People v Armstrong, 305 Mich App 230, 247; 851 NW2d 856 (2014).
Further, the trial court noted that based on its memory and the impression it got from
trial, it “would be ignoring the obvious if [it] were to say that there were no signs or no evidence
of serious psychological injury requiring professional treatment.” The trial court had the
opportunity to observe Lehman’s demeanor during trial and noted how the funeral home was his
life and when defendant committed the crimes, everything changed for Lehman. See
Steanhouse, ___ Mich App at ___; slip op at 20 (discussing serious psychological injury as it
relates to OV 5 and noting that the trial court’s opportunity to observe the demeanor of the
victim’s family members supported its factual findings that they sustained psychological injury).
Accordingly, we conclude that the trial court’s factual finding that Lehman suffered a serious
psychological injury was not clearly erroneous and was supported by a preponderance of the
evidence. The evidence sufficiently demonstrates that Lehman suffered a serious psychological
injury that may require professional treatment, and therefore, the trial court properly assessed 10
points for OV 4.
scoring the sentencing guidelines or inaccurate information relied upon in determining the
defendant’s sentence.”
2
Although defendant challenges the scoring of OV 4, as will be discussed later, that challenge
relates to the scoring of the offense variables for his convictions of uttering and publishing, and
not his convictions of fraudulent insurance acts. The trial court scored the offense variables
separately for each group of offenses.
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In its cross-appeal, plaintiff argues that the trial court erred by granting defendant’s
motion for a directed verdict of acquittal and dismissing defendant’s convictions for
embezzlement, CCE, and CCE proceeds. In reviewing a trial court’s decision regarding a
motion for directed verdict, we review the evidence in a light most favorable to the prosecution
to “determine whether a rational trier of fact could have found that the essential elements of the
crime were proved beyond a reasonable doubt.” People v Riley (After Remand), 468 Mich 135,
139-140, 659 NW2d 611 (2003).
On appeal, the parties only argue whether the money converted by defendant belonged to
the funeral home to support the convictions for embezzlement under MCL 750.174, which in
turn supports the convictions for CCE and CCE proceeds. Embezzlement by an agent or
employee, MCL 750.174, requires proof of six elements:
(1) the money in question must belong to the principal, (2) the defendant must
have a relationship of trust with the principal as an agent or employee, (3) the
money must come into the defendant’s possession because of the relationship of
trust, (4) the defendant dishonestly disposed of or converted the money to his own
use or secreted the money, (5) the act must be without the consent of the
principal, and (6) at the time of conversion, the defendant intended to defraud or
cheat the principal. [People v Lueth, 253 Mich App 670, 683; 660 NW2d 322
(2002).]
The Prepaid Funeral and Cemetery Sales Act provides that “all funds received in
connection with a prepaid contract shall be held in escrow by an escrow agent for the benefit of
the contract beneficiary.” MCL 328.222(1). Funds are not disbursed until “the death of the
contract beneficiary and upon performance by the provider of its obligation to furnish
merchandise or funeral or cemetery services pursuant to the prepaid contract.” MCL
328.222(11).
In this case, the money never belonged to the funeral home. The money belonged to the
contract beneficiaries until their death and upon performance of the funeral home’s obligations.
Plaintiff argues that defendant’s wrongful acts caused title to pass to the funeral home, and
therefore, the money belonged to it. However, although the funeral home received checks from
the insurance company, the money still did not belong to it. The money belonged to the contract
beneficiaries until their death and upon performance of the funeral home’s obligations, neither of
which occurred at the time.
Additionally, the money did not come into defendant’s possession “because of the
relationship of trust.” Lueth, 253 Mich App at 683. The money came into defendant’s
possession because he tricked the insurance companies into writing checks to the funeral home
by filing false death claims. In discussing the difference between larceny and embezzlement, our
Supreme Court has stated that with embezzlement “there must be an unlawful appropriation of
that which comes into possession rightfully.” People v Bergman, 246 Mich 68, 71; 224 NW 375(1929). In this case, defendant did not come into possession of the money rightfully. Therefore,
the trial court did not err by granting defendant’s motion for a directed verdict of acquittal and
dismissing defendant’s convictions for embezzlement, CCE, and CCE proceeds, because the
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money converted by defendant never belonged to his employer, the funeral home, as required by
MCL 750.174.
Affirmed.
/s/ Donald S. Owens
/s/ Jane E. Markey
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