APPEAL from the Superior Court of San Bernardino County. Cara D. Hutson, Judge. Affirmed in part with directions; reversed in part. (Super.Ct.No. FSB702505).
The opinion of the court was delivered by: Ramirez P.J.
CERTIFIED FOR PUBLICATION
While defendant Charles Patrick Williams was the general manager of Valley of Enchantment Water Company (VOE), he embezzled more than $50,000 from his employer and did not pay the company's payroll taxes between 1999 and 2006. As a consequence, VOE incurred attorney fees, fees for the internal audit by a certified public accounting (CPA) firm, as well as penalties and interest assessed by the Internal Revenue Service (IRS) for unpaid payroll taxes. At a contested hearing, the People sought a restitution order in the amount of $212,975.61, for all losses, less any amounts previously paid by defendant. The trial court denied restitution for the IRS penalties assessed against VOE and the People appealed. We reverse.
Defendant was employed as the general manager of VOE Water Company from December 1999 through December 2006. In the fall of 2005, the office manager Rose A. noticed problems with the books after defendant started delegating billing responsibility to her. She consulted the company's QuickBooks records and noticed discrepancies; she also noticed cash losses from the cash register. She learned that when defendant received a payment from a customer, he would credit the customer's account for the payment but would not enter the payment into the daily receipts. He also changed the daily deposits by altering the deposit slip to take out cash. He also had the board president sign blank checks, and later made them out to himself, although he would make an entry in QuickBooks showing the checks were made out to another company.
In November 2006, Rose found numerous suspicious checks and discrepancies and consulted field supervisor Brian S. about the irregularities. Brian informed her that in the fall of 2005 he had a problem with his retirement account when he discovered that VOE had not made any contributions since 2001. Brian confronted defendant about the problem and defendant informed Brian that the person who handled the retirement account was misappropriating funds. After Brian and defendant calculated the amount that should have been contributed to the retirement account from previous years, the contribution was made.
Also in 2006, Brian was audited by the IRS and was informed that the payroll taxes on his earnings had not been paid. Defendant attributed the problem to Brian's tax preparer, so Brian asked his tax preparer about it. The tax preparer learned that the company had not paid the taxes, but cleared up Brian's liability for the unpaid taxes. However, the IRS then went after VOE for the back taxes.
The VOE board placed defendant on administrative leave and met with their attorney. Defendant resigned in November 2006. An investigation was performed by an independent business consultant and CPA firm. In the course of the investigation, defendant admitted embezzling funds from VOE in a letter signed on March 23, 2007. In that letter defendant promised to pay (1) $53,363 for the VOE checks he wrote to himself; (2) $18,000 for cash stolen; (3) $5,678.03 for payments on his American Express account made by VOE; (4) all investigative and attorney fees relating to the investigation; and (5) all penalties and interest that have accrued due to his failure to pay the VOE payroll taxes from December 1999 to September 2006. He also signed a settlement agreement and general release.
On July 3, 2007, a felony complaint was filed alleging one count of grand theft by embezzlement. (Pen. Code,*fn1 § 487, subd. (a).) It was further alleged that in the commission of that offense, he took property of a value in excess of $50,000. (§ 12022.6, subd. (a).) On June 17, 2008, defendant pled guilty to count 1 and admitted the enhancement. The change of plea included a stipulated sentence of four years, with execution of sentence suspended upon a grant of probation, and provision for a restitution hearing.
The restitution hearing took place on June 29, 2009. After considering the pleadings submitted by the People and defendant, the court declined to order payment of any penalties as part of the restitution order. The People appealed from the restitution order.
On appeal, the People contend that (1) restitution is a constitutional and statutory right for victims of crime, (2) a victim's right to restitution should be construed in his or her favor, and (3) the lower court erred in relying on the holding of People v. Boudames (2006) 146 Cal.App.4th 45. Phrased another way, the issue is whether the trial court erred in refusing to order restitution for IRS penalties incurred by VOE as a result of defendant's embezzlement of funds that should have been paid to the IRS for payroll taxes. We agree.
In 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 or victims. (§ 1202.4, subd. (f).) The restitution order must be sufficient to fully reimburse the victim or victims for every determined economic loss incurred as a result of the defendant's criminal conduct, including, but not limited to, among other things, full or partial payment for the value of stolen or damaged property (§ 1202.4, subd. (f)(3)(A)), and actual and reasonable attorney's fees and other costs of collection accrued by a private entity on behalf of a victim. (§ 1202.4, subd. (f)(3)(H).) Section 1202.4, ...