State v. Graham

2013 UT App 110_________________________________________________________
THE UTAH COURT OF APPEALS
STATE OF UTAH,
Plaintiff and Appellant,
v.
BENJAMIN JAY GRAHAM,
Defendant and Appellee.
Opinion
No. 20110509‐CA
Filed May 2, 2013
Fourth District, Provo Department
The Honorable Claudia Laycock
No. 091402829
John E. Swallow, Karen A. Klucznik, and
Craig L. Barlow,
Attorneys for Appellant
Edward K. Brass, Attorney for Appellee
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion,
in which JUDGES GREGORY K. ORME
and WILLIAM A. THORNE JR. concurred.
CHRISTIANSEN, Judge:
¶1 The State charged Defendant Benjamin Jay Graham
(Defendant) with multiple counts of communications fraud, theft,
and unlawful pattern of activity. Following the preliminary
hearing, the magistrate granted Defendant’s motion to dismiss all
of the charges based on insufficient evidence. The State appeals the
State v. Graham
magistrate’s refusal to bind Defendant over on one count of second
degree felony theft. We reverse and remand.
BACKGROUND1
¶2 In the spring of 2005, the owner of Graham Ironworks,
Rodger Graham (Defendant’s Father),2 approached the chief
executive officer of Marinda Holdings (Investor) about a potential
business opportunity involving the salvage and resale of wood
reclaimed from the site of a former steel mill. Defendant’s Father
asked Investor for a total investment of $500,000 to start this
business—$250,000 to purchase the salvage rights, and another
$250,000 to remove the wood. Defendant’s Father also told Investor
that the salvaged wood was worth “anywhere from 5 to 8 million
bucks.” Investor agreed to work with Defendant’s Father on the
salvage project, mainly because he viewed it as an opportunity to
involve his son (Investor’s Son) in a business. Defendant’s Father
indicated that he would also like his son, Defendant, to be involved
in the project.
¶3 Defendant’s Father and Investor decided that their sons
would co‐own the salvage business, though Defendant’s Father
would be the “brains” behind the operation because neither young
man had much business experience. Investor agreed to provide the
financing, and thereafter, the parties formed Green Harvest
Materials, Inc. (Green Harvest). Investor’s Son, as co‐owner, was to
1. At a preliminary hearing, “[t]he magistrate should view the
evidence in a light most favorable to the prosecution and resolve
all inferences in favor of the prosecution.” State v. Hawatmeh, 2001
UT 51, ¶ 3, 26 P.3d 223 (citation and internal quotation marks
omitted). We state the facts here accordingly. See id.
2. Defendant’s Father is a defendant in a related case. See State v.
Graham, 2013 UT App 109.
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be in charge of marketing, and Defendant, as the other co‐owner,
was to be in charge of operations. They hired an assistant to serve
as Green Harvest’s secretary and office manager (Office Manager).
Office Manager’s responsibilities included collecting all receipts
from debit card purchases on the company’s bank account,
purchasing office supplies, and paying all invoices presented to
Green Harvest. Shortly after the company’s formation, Investor
began making substantial payments to Graham Ironworks and
Green Harvest. Defendant, Investor’s Son, and Office Manager
were all listed as signatories on Green Harvest’s bank account, and
each had a company debit card. All three individuals could also
unilaterally authorize wire transfers.
¶4 No written company policy was ever created to address the
appropriate uses of the company’s debit cards. However, Office
Manager testified at the preliminary hearing that several
conversations took place among the signatories regarding the
parameters of appropriate use of the company debit cards. Office
Manager explained that the three individuals discussed how
“charges for cigarettes or food weren’t appropriate for card use.
That [the debit card] was strictly for business purposes and
necessary . . . related costs of the business and not personal
expenses.” In contrast, Investor’s Son testified at the preliminary
hearing that no such discussion had taken place prior to November
2005. Specifically, he testified that he did not “think [any of the
signatories] had a formal conversation about [the appropriate uses
of the company debit card]” prior to November 2005.
¶5 In November 2005, Defendant traveled to Mexico with his
family for a personal vacation. While there, he used his company
debit card and spent over $7,500 on rental car fees. Office Manager
noticed the charges and brought them to the attention of Investor’s
Son, who immediately contacted Defendant about the personal
expenditures charged to the Green Harvest account. Defendant
told Investor’s Son that he used his company debit card in Mexico
only because he and his family had been caught in a hurricane, he
had left his personal credit card at home, and he was “desperate.”
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Investor’s Son indicated that even though he understood
Defendant’s predicament, he believed that Defendant had
inappropriately used the company debit card. Investor’s Son also
told Defendant that “[i]t’s company money,” that the charges in
Mexico did not “have anything to do with [their] business,” and
that, therefore, Defendant should not have used business funds for
personal expenditures. Defendant agreed to pay the money back to
Green Harvest. However, and quite tellingly, Defendant has never
repaid the amount due pursuant to what he characterized as a
short term loan necessitated by the happenstance that he had
forgotten his personal card. Additionally, a certified weather report
submitted by the State at the preliminary hearing revealed that no
hurricane or other notable weather phenomenon was reported in
Mexico during the time of Defendant’s trip.
¶6 In addition to multiple counts of communications fraud and
unlawful pattern of activity, the State subsequently charged
Defendant with theft, a second degree felony, based upon the use
of his Green Harvest debit card for personal expenses in Mexico
and his failure to repay that amount. See generally Utah Code Ann.
§ 76‐6‐412(1)(a)(i) (LexisNexis 2012)3 (classifying a theft offense as
a second degree felony when “the value of the property or services
[that have been stolen] is or exceeds $5,000”). Following his
preliminary hearing, Defendant filed a motion to dismiss all of the
charges for insufficient evidence. The magistrate granted the
motion, and as to the theft charge at issue on appeal, the magistrate
ruled that before Defendant had used the company debit card
while on vacation, “there were no policies in place at Green
Harvest forbidding personal use of the [debit] card” and that
Investor’s Son “ratified the transaction by agreeing to let
[Defendant] repay the money.” Therefore, the magistrate
determined that “the State failed to show the first element of theft
3. Because the relevant statutory provisions have not materially
changed, we cite the most current version of the Utah Code
throughout this opinion.
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because there is no evidence that [Defendant] exercised
unauthorized control over any property.” See id. § 76‐6‐404 (“A
person commits theft if he obtains or exercises unauthorized
control over the property of another with a purpose to deprive him
thereof.”). The State appeals.
ISSUE AND STANDARD OF REVIEW
¶7 The sole issue on appeal is whether the magistrate
incorrectly refused to bind Defendant over on the theft charge
following the preliminary hearing. “A [magistrate’s] decision to
bind over a criminal defendant for trial presents a mixed question
of law and fact and requires the application of the appropriate
bindover standard to the underlying factual findings.” In re I.R.C.,
2010 UT 41, ¶ 12, 232 P.3d 1040. Thus, “an appellate court should
grant commensurate limited deference to a magistrate’s application
of the bindover standard to the facts of each case.” State v. Virgin,
2006 UT 29, ¶ 34, 137 P.3d 787. “Applying the wrong legal
standard, however, will always exceed whatever limited discretion
the magistrate has in the bindover decision.” State v. Ramirez, 2012
UT 59, ¶ 7, 289 P.3d 444.
ANALYSIS
I. The Bindover Standard
¶8 To support the bindover of a defendant for trial, the
prosecution must put forward enough evidence at the preliminary
hearing to establish probable cause. See Utah R. Crim. P. 7(i)(2)
(allowing for bindover when the magistrate “finds probable cause
to believe that the crime charged has been committed and that the
defendant has committed it”); see also Virgin, 2006 UT 29, ¶ 17. “[A]
showing of ‘probable cause’ entails only the presentation of
‘evidence sufficient to support a reasonable belief that the
defendant committed the charged crime.’” Ramirez, 2012 UT 59, ¶ 9
20110509‐CA 5 2013 UT App 110State v. Graham
(quoting Virgin, 2006 UT 29, ¶ 17). A “reasonable belief” in this
context parallels the standard for an arrest warrant, meaning that
the level of evidence that the prosecution must show is less than
what is required to find guilt beyond a reasonable doubt. Id.Indeed, “[a]ll that is required is reasonably believable evidence—as
opposed to speculation—sufficient to sustain each element of the
crime(s) in question.” Id. “Inclusion of the word ‘reasonable’ in this
standard suggests that, at some level of inconsistency or
incredibility, evidence becomes incapable of satisfying the probable
cause standard. When that is the case, magistrates are empowered
to deny bindover.” Virgin, 2006 UT 29, ¶ 22.
¶9 At a preliminary hearing, the magistrate is not to weigh or
sift through conflicting evidence. See State v. Clark, 2001 UT 9, ¶ 10,
20 P.3d 300. Rather, the “magistrate must view all evidence in the
light most favorable to the prosecution and must draw all
reasonable inferences in favor of the prosecution.” Id. (citation and
internal quotation marks omitted). Indeed, the magistrate’s “role
does not encompass an assessment of whether such inference[s
are] more plausible than an alternative that cuts in favor of the
defense” because “the choice between two alternative, reasonable
inferences is a matter for the factfinder at trial, not for the
magistrate at the preliminary hearing.” Ramirez, 2012 UT 59, ¶¶ 10,
13. Though it is true that a magistrate may make some initial
credibility determinations at the preliminary hearing, “the extent
of those determinations is limited.” Virgin, 2006 UT 29, ¶ 24. The
magistrate “may [only] disregard or discredit evidence that is
wholly lacking and incapable of creating a reasonable inference
regarding a portion of the prosecution’s case” or evidence that is
“so contradictory, inconsistent, or unbelievable that it is
unreasonable to base belief of an element of the prosecutor’s claim
on that evidence.” Id. ¶¶ 24–25 (citation and internal quotation
marks omitted). However, when the evidence conflicts but is
otherwise credible, it is inappropriate for the magistrate to weigh
or disregard that evidence at the preliminary hearing. Id.
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II. The Evidence Presented at the Preliminary Hearing
¶10 To properly bind Defendant over on the second degree theft
count, the evidence must support a reasonable belief that
(1) Defendant obtained or exercised unauthorized control; (2) over
the property of Green Harvest; (3) with a purpose to permanently
deprive Green Harvest of that property; and (4) the property has a
value equal to or exceeding $5,000. See Utah Code Ann. §§ 76‐6‐404,
‐412(1)(a)(i). The magistrate dismissed the theft count because the
State failed to prove the first of these four elements–‐unauthorized
control. Specifically, the magistrate determined,
The State argues that [Defendant] exercised
unauthorized control over the Green Harvest Credit
Card when he charged $7,569.45 for the rental car.
However, the evidence presented shows the exact
opposite. Before [Defendant] used the credit card on
vacation, there were no policies in place at Green
Harvest forbidding personal use of the credit card.
Furthermore, . . . [Investor’s Son] ratified the
transaction by agreeing to let [Defendant] repay the
money. Thus, the evidence only shows that
[Defendant] owed Green Harvest $7,569.45.
Consequently, the State failed to show the first
element of theft because there is no evidence that
[Defendant] exercised unauthorized control over any
property.
¶11 We determine that the prosecution carried its burden at the
preliminary hearing. The key piece of evidence presented by the
State was Officer Manager’s testimony that Office Manager,
Investor’s Son, and Defendant had discussed the appropriate uses
and parameters of the company debit cards prior to Defendant’s
vacation to Mexico. Office Manager testified at the preliminary
hearing that they had several conversations and that, based on
those conversations, Defendant was on notice that he was not
20110509‐CA 7 2013 UT App 110State v. Graham
authorized to use his company debit card for personal
expenditures.
¶12 In viewing the evidence in the light most favorable to the
prosecution, Office Manager’s testimony demonstrates that
Defendant should have known prior to leaving for his Mexican
vacation that he was not authorized to use his company debit card
for personal expenditures. This evidence was sufficient to support
a reasonable belief that Defendant exercised unauthorized control
over the Green Harvest debit card. In addition, reasonably
believable evidence suggests that Defendant intentionally
misrepresented to Investor’s Son the existence of a hurricane.
Defendant would have no need to lie about a hurricane if he truly
believed he was authorized to use his card for personal reasons. It
appears that if Defendant’s story about the hurricane were true, he
would have immediately disclosed his use of the debit card to
Investor’s son upon his return and made arrangements to pay back
the company. These facts demonstrate that the State introduced
sufficient evidence that Defendant exercised unauthorized control
over the company debit card and intended to deprive the company
of those funds when he failed to repay them.
III. Whether the Magistrate Acted Within Her Discretion in Not
Binding Defendant Over for Trial
¶13 In making her bindover decision, it appears that the
magistrate disregarded Office Manager’s testimony when she
found that “there were no policies in place at Green Harvest
forbidding personal use of the credit card.” Although a magistrate
is entitled to make “some limited credibility determinations at the
preliminary hearing,” the magistrate may only disregard
testimonial evidence when it is “wholly lacking and incapable of
creating a reasonable inference regarding a portion of the
prosecution’s case,” State v. Virgin, 2006 UT 29, ¶¶ 23–24, 137 P.3d
787 (citation and internal quotation marks omitted), or if the
evidence falls “to a level of inconsistency or incredibility that no
reasonable jury could accept it,” State v. Ramirez, 2012 UT 59, ¶ 14,
20110509‐CA 8 2013 UT App 110State v. Graham
289 P.3d 444 (citation and internal quotations marks omitted). On
the record before us, Office Manager’s testimony does not appear
to be patently inconsistent or incredible. Accordingly, “[i]t is
inappropriate for [the] magistrate to weigh credible but conflicting
evidence at a preliminary hearing as a preliminary hearing is not
a trial on the merits but a gateway to the finder of fact.” Virgin,
2006 UT 29, ¶ 24 (citation and internal quotation marks omitted).
¶14 Though Investor’s Son testified at the preliminary hearing
that no conversations regarding appropriate use of the company
debit cards had taken place prior to Defendant’s trip, his testimony
conflicts with Office Manager’s testimony. Evaluating the
competing testimony of witnesses is the function of the factfinder,
not the magistrate. Thus, it was error for the magistrate to reject
Office Manager’s version of the facts in favor of Investor’s son’s
version. Resolution of this evidentiary conflict should have been
left to the factfinder at trial.
¶15 The State analogizes the facts of this case to those of State v.
Ramirez, 2012 UT 59, 289 P.3d 444. In that case, the magistrate
refused to bind the defendant over on drug possession charges
after considering the evidence presented at the preliminary
hearing. Id. ¶ 5. The evidence included drug paraphernalia
containing drug residue located in a motel room in the exact
location the defendant had directed and permitted officers to
search and the defendant’s admission to having a drug problem. Id.
¶¶ 2–5, 11. The magistrate “opined that there was no evidence that
Ramirez had knowledge that the drug residue and paraphernalia
were present in the motel room either when he was personally
present in the room or when officers searched the room.” Id. ¶ 11.
Therefore, the magistrate was faced with a choice between two
competing inferences based on the evidence. In the magistrate’s
view, “it [was] a stronger inference [that the defendant] didn’t
know the drugs were there, or he wouldn’t have sent the police
officers to that place to look around.” Id. ¶ 5 (internal quotation
marks omitted).
20110509‐CA 9 2013 UT App 110State v. Graham
¶16 In reversing the magistrate’s decision to refuse bindover, the
Utah Supreme Court explained that there was sufficient evidence,
though circumstantial, to find probable cause in support of the
charges against the defendant and that the magistrate erred by
rejecting the inference put forward by the prosecution because
“[t]he relative strength of the competing inferences in the case was
a question for the jury at trial.” Id. ¶ 13. The court acknowledged
that the prosecution could have presented more evidence
connecting Ramirez to the contraband in the motel room. Id. ¶ 16.
However, the court also made clear that “it is not the [magistrate’s]
role in a preliminary hearing to hold the prosecution to the
presentation of a comprehensive or ‘best’ case against the accused.”
Id. ¶ 17.
¶17 Here, similar to Ramirez, the magistrate was faced with two
competing, reasonable inferences to be derived from the evidence
presented at the preliminary hearing. On one hand, the theft
charges are supported by Office Manager’s testimony that
Defendant should have been aware that using his company debit
card for personal expenses was not allowed. In addition,
Defendant’s dishonesty regarding the hurricane and his failure to
reimburse the company for his personal expenses suggest that he
intended to deprive Green Harvest of its funds. On the other hand,
Defendant’s behavior can be explained by Investor’s Son’s
testimony that no conversation had taken place prior to
Defendant’s trip regarding the appropriate use of the company
debit cards.
¶18 We determine that the magistrate erred in denying bindover
and in granting Defendant’s motion to dismiss. As explained
above, an evidentiary conflict should be resolved by the jury at trial
because, first, the magistrate is bound to “view all evidence in the
light most favorable to the prosecution and must draw all
reasonable inferences in favor of the prosecution.” State v. Clark,
2001 UT 9, ¶ 10, 20 P.3d 300 (citation and internal quotation marks
omitted). Second, “[i]n the face of two competing inferences that
could reasonably be accepted at trial, the magistrate should have
20110509‐CA 10 2013 UT App 110State v. Graham
bound the matter over for trial. It is not for the [magistrate] to
choose between competing reasonable inferences from the evidence
presented at a preliminary hearing.” Ramirez, 2012 UT 59, ¶ 15.
Here, the magistrate erred by drawing inferences from the
evidence in favor of the defense. Because both the prosecution and
the defense advanced reasonable inferences derived from the
evidence, the magistrate should have allowed the jury to resolve
the conflict.
¶19 Certainly, the prosecution’s evidence could be stronger, but
the prosecution is not required to present a “comprehensive or
‘best’ case against the accused” at the preliminary hearing. See id.
¶ 17. The question is only whether the evidence is “‘sufficient to
support a reasonable belief that . . . [D]efendant committed the
charged crime.’” See id. ¶ 9 (quoting Virgin, 2006 UT 29, ¶ 17). In
this case, the totality of the evidence and the inferences drawn
therefrom were sufficient to support a reasonable, non‐speculative
belief that Defendant committed the theft alleged by the State.
Accordingly, we hold that the magistrate erred in refusing to bind
Defendant over on the theft charge.4
4. We take note of Defendant’s argument that the bindover
determination is not a mere “rubber stamp for the prosecution,”
State v. Hester, 2000 UT App 159, ¶ 7, 3 P.3d 725, abrogated on other
grounds by State v. Clark, 2001 UT 9, ¶ 14, 20 P.3d 300, and that
magistrates must “attempt to ensure that all ‘groundless and
improvident prosecutions’ are ferreted out no later than the
preliminary hearing,” Clark, 2001 UT 9, ¶ 10 (quoting Hester, 2000
UT App 159, ¶ 7). Though the evidence in this case could be
stronger, the facts presented at the preliminary hearing were
sufficient to support a finding of probable cause for theft. Thus, this
case does not present a “groundless and improvident prosecution.”
See id.
20110509‐CA 11 2013 UT App 110State v. Graham
CONCLUSION
¶20 Though it could have been stronger, the evidence presented
by the prosecution at the preliminary hearing meets the probable
cause standard for second degree felony theft. Accordingly, we
reverse and remand with instructions to bind Defendant over for
trial.
20110509‐CA 12 2013 UT App 110