Investigation and Prosecution of a Complex Financial Case Ivan Orton

Investigation and Prosecution of a Complex Financial Case Ivan Orton Senior Deputy Prosecuting Attorney Economic Crimes Unit King County Prosecuting Attorney [email protected] 206 296-9082

Today’s Agenda Background on two recent cases that went to trial Discuss the challenges these cases presented when preparing for trial Demonstrate how evidence was produced at trial

CASES The jail bookkeeper who embezzled from work release inmates The plundering of Frances Taylor’s assets

Jail Bookkeeper Former jail bookkeeper charged with stealing from inmates Posted by Jennifer Sullivan A former bookkeeper at the King County Jail was charged Monday with 22 counts of second-degree theft for allegedly stealing money from inmates who were serving their time on work release, according to charging documents filed in

William Findley

State Auditor’s Report

Process

Bookkeeping

Check for Cash Scheme Unrecorded inmate check would be included in deposit Equal amount of cash would be removed from deposit Oh, if it were only that simple

Auditor Identified 66 Such Transactions in Audit Period (one year) I eliminated all that were not pristine examples Left with 39 17 were beyond the statute of limitations The other 22 were charged

Here Was My Problem How in the world can I present this to a jury so they will Understand it Not be totally bored

Citizenship Award

Legal Theory

Three Theories of Theft By Deception By Taking By Exertion of Unauthorized Control

Exertion of Unauthorized Control Having any property or services in one's possession, custody or control as bailee, factor, lessee, pledgee, renter, servant, attorney, agent, employee, trustee, executor, administrator, guardian, or officer of any person, estate, association, or corporation, or as a public officer, or person authorized by agreement or competent authority to take or hold such possession, to secrete, custody, or withhold, control or appropriate the same to his or her own use or to the use of any person other than the true owner or person

Essence Hold property in a capacity which limits your authority Exceed that authority

Capacity Most Common Capacities in Elder Fraud Cases Attorney (Power of Attorney) Other Listed (Guardian, Trustee) Agreement Crucial Concept of Fiduciary

A Lawyer Will Always Object

Any Kind of Objection

POA - What’s the Law Power of Attorney A person acting under authority of a Power of Attorney does not have the power to make, amend, alter or revoke the principal’s wills, and does not have the power, unless specifically provided otherwise in the document, to make gifts of property owned by the principal. RCW 11.94.050

POA - What’s the Law Power of Attorney An attorney-in-fact is an agent to whom the principal has given authority to act in his or her stead for the purposes set forth in the power of attorney. In that role, the agent becomes a fiduciary who is bound to act with the utmost good faith and loyalty and to fully disclose all facts relating to his interest in and his actions involving the affected property; the agent must also deliver all benefits derived from or inuring to the property from the agent's breach of the fiduciary relationship to the principal. Bryant v. Bryant, 125 Wash.2d 113, 118-19, 882 P.2d 169 (1994) Crisman v. Crisman, 85 Wash.App. 15, 22, 931 P.2d 163 (1997) (citing Moon v. Phipps, 67 Wash.2d 948,

POA - What’s the Law Power of Attorney Inherent in the fiduciary relationship between principal and attorney-in-fact is the duty to account for the assets managed by the attorneyin-fact. Crisman v. Crisman, 85 Wash.App. 15, 22, 931 P.2d 163 (1997) In re Estate of Palmer, 145 Wash.App. 249, 264, 187 P.3d 758 (2008)

TRUSTEE - What’s the Law As used in these instructions, the word “trust” means a fiduciary relationship in which one person holds the property of another person, subject to the obligation to keep or use that property for the benefit of the other person. As used in these instructions, the word “trustee” means the individual who holds the trust property for the benefit of the other person. Restatement of Trusts, Second, § 2 Bogert, Trusts and Trustees, 2nd Edition § 1

What is a Fiduciary A fiduciary relationship exists where confidence is reposed on one side and resulting superiority and influence on the other. Any person whose relation with another is such that the latter justifiably expects his welfare to be cared for by the former occupies a fiduciary position. Tucker v. Brown, 199 Wash. 320, 331, 92 P.2d 221 (1939) Salter v. Heiser, 36 Wn.2d 536, 551, 219 P.2d 574 (1950) Moon v. Phipps, 67 Wn.2d 948, 955, 411 P.2d 157 (1966) Liebergesell v. Evans, 93 Wn.2d 881, 889-90, 613 P.2d 1170 (1980) Restatement of Contracts, §472(1)(c), & Comment C at 898 (1932)

Where does Fiduciary Concept Fit Many of the named relationships (attorney, agent, trustee, executor, administrator, guardian) explicitly carry with them a legal fiduciary duty. Even if not acting in one of these capacities, one can have an in-fact fiduciary relationship. A fiduciary has certain limits on their authority. If one hold property by agreement, as a fiduciary, the limits on a fiduciary define the scope of authorized control Exceeding that authority, in the right amount and with the requisite intent to deprive, is theft

Fiduciary Law A fiduciary, in handling another’s (the principal’s) property, must exercise the utmost good faith, disclose fully all facts relating to his interest in and his actions affecting the property involved in the fiduciary relation, and must use his principal’s property solely for his principal’s benefit. Moon v. Phipps, 67 Wn.2d 948, 954-56, 411 P.2d 157 (1966)

Fiduciary Law A fiduciary may not exert undue influence over the other party in the fiduciary relationship in order to obtain a gift from the person. Doty v. Anderson, 17 Wn. App. 464, 471, 563 P.2d 1307 (1977)

Fiduciary Law Whether a gift to a fiduciary is the product of undue influence is a factual question to be determined in light of the following factors: the donor’s age and mental condition; her prior intentions and concerns as to the disposition of her property, the size of the gift and the financial condition in which it leaves the donor; her knowledge and understanding of the terms of the gift, and the presence or absence of independent advice to the donor prior to the gift. McCutcheon v. Brownfield, 2 Wn. App. 348, 356-59, 467 P.2d 868 (1970)

Fiduciary Law Fiduciary duties do not arise when the agent learns of his legal obligations arising from the agency relationship. Rather, a fiduciary relationship arises when the agent exercises dominion and control over the principal's property sufficient to alienate the principal's right to the property. Crisman v. Crisman, 85 Wash.App. 15, 22, 931 P.2d 163 (1997) (citing Moon v. Phipps, 67 Wash.2d 948, 955-56, 411 P.2d 157 (1966)) In re Estate of Palmer, 145 Wash.App. 249, 263, 187 P.3d 758 (2008)

Fiduciary Law These instructions were given in the Tyrone Dash case CAUTION: These instructions are an issue on appeal Well . . . Maybe not so much

Issues on Appeal The Fiduciary Instructions The “Good-Faith-Claim-of-Title” Defense The Frances Taylor Videotape and the Confrontation Clause The “Aggravating Factors” instruction (the Bashaw issue) The Statute of Limitations Issue

The Fiduciary Instructions Defense Argument: Unprecedented to use Law from Civil Cases as basis for Criminal Instructions Assault Living with a Prostitute Proximate Cause Securities Fraud theft

The “Good-Faith-Claim-ofTitle” Defense Defense Argument: It’s Good-FaithClaim-of-Right or Entitlement, not Title Look at the word Self Help is Not Included Scenario intended for

The Frances Taylor Videotape and the Confrontation Clause Crawford and the Change in the Law in 2004 Defense: This is Testimonial Me: Footnote 9 in Crawford Court: Was She a Witness for You? I-5 North/I-5 South, 5th Ave. S/5th Ave. N. Subsequent cases all involved truth of matter asserted

The “Aggravating Factors” instruction (the Bashaw issue) 9 months later Unanimity Waived? Lots of Questions but Hands are Tied

The Statute of Limitations Issue Why do Prosecutors only Make Love from the Bottom Position? Statute of Limitations Continuing Crime Didn’t ask that Jury be Instructed they Must Find at Least One Criminal Act within Statute of Limitations

The Concern: Good Shape on First Three Issues Might Lose on Bashaw Issue, but . . . Great Risk of Reversal on Statute of Limitations Issue BUT If We Could Win the First Three Issues it Would Be a Major Victory

The Decision (Monday) Reversed on Statute of Limitations – Remanded for a New Trial Bashaw – Deferred to Supreme Court Decided Confrontation Issue on Narrow Grounds But Badmouthed our Theory (5th Ave. S.) Completely Ignored Important Issues of Fiduciary Instructions and Claim of Title Issues Meeting Tomorrow to Decide

Organization Bates Stamp? Index to Bates (Outline rather than specific documents)

10/26/2010 04:14 PM DIR . 10/26/2010 04:14 PM DIR . 03/16/2008 08:31 PM 65,024 Combined - 1-29-08 - Contracting.xls 09/19/2009 08:05 PM 1,156,096 Combined - 1-29-08 - Dash.xls 09/09/2009 10:15 AM 1,441,792 Combined - 1-29-08.xls 01/28/2008 09:50 PM 23,552 Ivan - Missing Frontier 4327.xls 02/05/2008 10:53 AM 107,008 IVAN - Bank of America 65663072 - Taylor.xls 01/29/2008 04:10 PM 757,248 Ivan - Bank of America 95644043 - Taylor.xls 02/20/2008 06:13 PM 522,752 IVAN - CC - AmEx 31005 - Francis J. Taylor.xls 02/29/2008 11:15 PM 73,216 Ivan - CC - Aspire Credit Card.xls 09/19/2009 01:30 PM 123,904 Ivan - CC - Bank of America Comb. VISA - MC - Taylor.xls 12/03/2007 02:00 PM 20,480 Ivan - CC - Bank of America MasterCard 0306 - Taylor.xls 12/03/2007 01:46 PM 18,944 Ivan - CC - Bank of America MasterCard 4177 - Taylor.xls 01/28/2008 11:42 AM 101,376 IVAN - CC - Capital One 6837 - Francis J. Taylor.xls 01/28/2008 11:43 AM 424,960 IVAN - CC - Citibank 1602 - Francis J. Taylor.xls 02/11/2008 03:48 PM 215,552 IVAN - CC - MBNA (AAA) 2843 - Francis J. Taylor.xls 01/31/2008 10:15 PM 17,920 IVAN - Frontier Bank 3340003841 - Taylor.xls 03/12/2008 06:23 PM 472,064 IVAN - Frontier Bank 3341004327 - Taylor.xls 01/29/2008 04:19 PM 25,088 IVAN - Frontier Bank 3341004590 - Taylor.xls 01/29/2008 04:21 PM 59,392 Ivan - Frontier Bank 3341006801 - Taylor.xls 09/08/2009 04:09 PM 53,248 Ivan - Frontier Bank 3341801656 - Taylor.xls 01/29/2008 10:26 PM 65,024 IVAN - Frontier Bank 3343021014 - Taylor.xls 02/15/2008 07:34 AM 15,872 IVAN - Frontier Bank 3343021774 - Taylor.xls 09/09/2009 10:02 AM 513,024 IVAN - US Bank 153500488967 - Francis J. Taylor.xls 09/09/2009 10:58 AM 58,880 IVAN - US Bank 153554317153 - Francis J. Taylor.xls 01/29/2008 04:33 PM 71,680 IVAN - US Bank 153592928177 - Francis J. Taylor.xls 09/08/2009 05:47 PM 410,112 IVAN -US Bank 153554558681 - Tyrone Dash.xls 09/19/2009 05:12 PM 102,912 loans and refinances.xls 27 File(s) 6,917,120 bytes Master the Detail

Bank Transactions

Credit Card Transactions

Here Was My Problem How in the world can I present this to a jury so they will Understand it Not be totally bored

William Findley Trial Four Auditors involved Two on Maternity Leave Two had left the Auditor’s Office and couldn’t be located

William Findley Trial Even if I could find them: How would I use the Audit Report It was almost incomprehensibly complex As with most audit reports, it identified system weaknesses that allowed thefts to go undetected

William Findley Trial Other Witnesses Findley Supervisor who detected initial problem Her Supervisor who referred to auditor Internal Investigations Sgt who compiled material for auditor Successor II Sgt who received audit report and reviewed it

William Findley Trial One Week Before Trial – An Epiphany There were four documents for each transaction History of Drawer Report Deposit Slip Item in deposit, not in Report Inmate account These four documents, when understood, largely spoke for themselves How could I introduce and explain these documents? How could the jury keep track when shown 39 x 4 (156) individual documents?

William Findley Trial The answer to the first question was Michael Maude The answer to the second question was: Give the jury a roadmap The old shampoo instructions “Lather, Rinse, Repeat”, i.e.

Explain Explain Explain Explain Explain Explain Explain

Work from the Simple To the Complex

Johnson Manufacturing 1019 Oct. 15, 2010 Pay to KC Work Release 100.00 One Hundred & 00/100 Dollars Bank of America 19/2 Jim Memo: Bob Smith Smith Construction 3088 Oct. 14, 2010 Pay to KC Work Release 200.00 Dollars Chase Manhattan 24/3 Charles Memo: Bob Smith 100.00 40.00 -------------------------------- 19/2 100.00 Johnson, Sr. Two Hundred & 00/100 Currency Coins: Smith 24/3 200.00 72/19 60.00 Arnold Grocery 3088 Oct. 14, 2010 Pay to KC Work Release 60.00 Sixty & 00/100 Dollars Key Bank 72/19 Memo: James Evans Arnold Total Robert 400.00 Total 400.00

Sgt. Maude Had reviewed audit report Had examined the documents for each transaction and had recreated each transaction Together with other witnesses, could lay foundation for each document Could explain each transaction

Road Map CHARGED COUNTS Count Missing Cash Extra Checks Johansen, Jodi Macko Thompson, Bryan Daniel Mooney, Laurie A. Moore, Lynette Alison O'Neill, Michael Charles Mooney, Laurie A.* Villalovos, Lori Mae 300.00 850.00 375.00 400.00 537.00 881.50 12 13 McMillan, Brent G. Goodwin, Eugene E.* Hall, Randy L. Bedell, Teresa L. aka Butterfield, Elizabeth 24-May O'Rielly-Williams, Khalila 25-May Cossette, Peter L. 1,369.90 - 1,069.90 850.00 375.05 (error of .05) 479.50 - 400.00 287.00 250.00 1,442.00 - 642.00 & 450.00 (undeposited) 681.50 200.00 1,000.00 500.00 14 15 16 17 18 19 20 21 22 4-Jun 5-Jun 18-Jun 20-Jun 22-Jun 3-Jul 18-Jul 26-Jul 6-Aug 1 2 3 4 5 7 8 10 11 Date 8-Feb 13-Feb 28-Feb 1-Mar 8-Mar 8-Mar 27-Mar Inmate 3-Apr 3-Apr 4-May 11-May Barre, Gregory G. DelGadillo, Caesar Loan, Richard S. Duncan, Emanuel C. Lee, Eu King, Gary Ralph Russell, Barbara Ann Nguyen, Sanh Thi Suh, Kee Won 350.00 1,000.00 500.00 625.00 989.20 439.00 359.25 325.00 300.00 319.90 428.40 477.00 400.00 500.00 600.00 25.00 1,189.20 - 200.00 not deposited 439.00 359.25 325.00 300.00 320.00 (error of .10) 214.20 214.20 477.00 400.00 1,000.00 500.00 Money Order

Road Map Date 17-Oct 17-Oct 27-Oct 13-Nov 17-Nov 4-Dec 8-Dec 8-Dec 13-Dec 3-Jan 9-Jan 12-Jan 22-Jan 30-Jan 14-Feb 15-Mar 21-Mar 27-Mar 8-May UNCHARGED INCIDENTS Inmate Missing Cash Trostle, Nicholas 506.20 Diaz, Fabian Shoemaker, Karen Elaine 484.00 Bui, Hung Hguyet 510.00 McLeod, Michael 242.70 Markland, Charles Michael 287.00 Markland, Charles Michael - 107.00 Markland/Shoemaker 359.00 Knuth, Charles Christian 340.00 Beebe, Kim L. 403.90 Triqueiro, Jonathan Paul 512.00 Swan, Leon Jade 400.00 Freeman, James Dean 700.00 Panidis, Justin K. 811.00 Jackson (Horton), Lawanda 203.00 Mesa, Felix Callazo 80.00 Sceeles, Steven R. 209.00 King, Gary Ralph 244.80 Hyden, Jonathan G. 221.00 Extra Checks 243.00 263.20 484.00 500.00 367.20 - 124.50 287.00 1,000.00 (5 M.O. not dep) 359.00 340.00 403.90 512.00 1,147.52 - 747.52 700.00 836 - 25 (undeposited) 203.00 80.00 209.00 244.80 221.00

Explain Went through each transaction in the same order With Same Questions Hands on for jury

History of Drawer 1,680

Deposit Slip

Missing Cash Missing Cash 1,680 -1,241

Unrecorded Item on Deposit Slip Missing Cash 1,680 -1,241 439

Lather, Rinse, Repeat 39 times By about the 5th or 6th time some jurors were there before I was Carnac

Result? Guilty of all 20 counts (we dismissed two) Sentenced in February Friday Our recommendation: 22 months Defense recommendation: 90 days Sentence: 22 months

Tyrone Dash Trial

Master the Detail Remember the spreadsheet of bank and credit card records That’s got to be accurate Don’t give the defense a foothold

Simplify

Give the Jury Enough to Calculate the Answer Themselves if They Want To But don’t force them to review the detail

First Key is Frame of Reference Jury Can Always come back to Timeline Pictures of Property Pictures of Key Checks Pictures of Victims

TIMELINE Year Event Jan 2000 Dash Initial Involvement May 2000 150,000 mortgage through Bank of America on Frances’ personal residence Jul 2000 Dash Largely Assumes Control of Frances' Finances Jul 2000 300,000 Frontier Bank Construction Loan Jan 2001 170,000 Frontier Bank Construction Loan Mar 2001 Church Removed from Control over Frances’ Assets Jul 2001 Last of Frances' Salomon Smith Barney Investment Account Exhausted Nov 2001 Cash Value of Frances' Jackson Nat'l Life Insurance Policy Spent Jan 2002 Dash Obtains Power of Attorney for Frances Mar 2002 323 Bellevue E. Apartment Sold for 500,000 Jun 2002 217,500 World Savings Bank Loan on Personal Residence (refinance of Bank of America mortgage) Mar 2003 200,000 loan on 310 Bellevue E. Apartment Jul 2003 297,500 Ameriquest Loan on Personal Residence (refinance of World Savings Bank mortgage) Oct 2003 310 Bellevue E. Apartment Sold for 800,000 Apr 2004 324,000 Ameriquest Loan on Personal Residence (refinance of earlier Ameriquest mortgage) Apr 2005 Dash Removed from Control of Frances' Finances

Pictures of Property

Second Key is Summaries Summaries of “selected” transactions For example, not all withdrawals, just withdrawals to defendant

Summaries of selective transactions – just withdrawals to the Defendant

Summarize all but highlight a few Summarize all credit cards, but group by categories and emphasize categories Use in cross ex Use in closing Give jury the full doc but do their work for them

Summarize in Imaginative Ways - ATM Withdrawals.xls - ATM-Cash Advance Calendar.xls

Summarize in Striking Ways Credit Card Charges for Dash's Benefit Paid for by Frances Taylor Funds 140000 120000 100000 80000 60000 40000 20000 0 2000 2001 2002 2003 2004 2005

Think About Distributing to Jury

Sometime One Summary can Tell the Whole Story Frances Taylor Net Worth 1997-2005 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005