APPEAL from judgments of the Superior Court of Los Angeles County, Jack W. Morgan, Judge. (Los Angeles County Super. Ct. No. BA 240392)
The opinion of the court was delivered by: Flier, J.
Opinion on remand from Supreme Court
CERTIFIED FOR PUBLICATION
Reversed as to Omar Bradley. Affirmed with directions as to John Johnson II and Amen Rahh.
In 2006, we affirmed the convictions of appellants, Omar Bradley,
Amen Rahh, and John Johnson II, for misappropriation and misuse of
public funds under Penal Code section 424. Appellants were former
high officials of the City of Compton (Compton or City).*fn1
Appellants were alleged to have misappropriated and
misused public funds by (1) charging personal expenses to their City
credit cards, and (2) "double-billing" the City for their travel
expenses by obtaining cash advances for the expenses and then, instead
of paying for the expenses with cash advanced, charging such expenses
to the City credit card.
Almost five years later, the Supreme Court returned the case to us to reconsider it in light of Stark v. Superior Court (2011) 52 Cal.4th 368 (Stark), which holds that section 424 requires "that the defendant knew, or was criminally negligent in failing to know, the legal requirements that governed the act or omission." (Stark, at p. 377.) Without the benefit of Stark, the trial court failed to instruct the jury on the scienter required for a violation of section 424. With respect to Johnson and Rahh, the error was harmless beyond a reasonable doubt and the judgments against them are affirmed. With respect to Bradley, the error was not harmless beyond a reasonable doubt, and the judgment against him is reversed.
Appellants and other defendants were charged by indictment with misappropriating public funds (§ 424, subd. (a)(1); count 1) and misusing public funds (§ 424, subd. (a)(2); count 2).*fn2 A jury returned guilty verdicts against appellants on both counts as charged.
The court denied probation to Bradley and Johnson. The court sentenced each to the midterm of three years in state prison on count 1, plus a concurrent three-year sentence on count 2. The court also imposed a restitution fine of $200 and imposed and stayed a parole revocation fine of $200 upon each of them. Bradley received a presentence custody credit of 140 days (subsequently recalculated to 158 days) and Johnson received a presentence custody credit of 141 days.
The court granted Rahh three years of formal probation on condition he serve one year in county jail and perform 200 hours of community service. The court ordered Rahh to pay a restitution fine of $200 and awarded him a presentence custody credit of 141 days. The parties stipulated that Rahh owed victim restitution in the amount of $8,523.37, and the court imposed a restitution order in that amount.
As noted, in 2006, we affirmed the convictions. After our high court returned the case to us, the parties filed supplemental briefs in which they dispute only whether the instructional error was harmless beyond a reasonable doubt.
Compton is a charter city governed by a city council. The Compton City Council consists of a mayor and four members, each representing a different district. The city council sets the policy and standards for the City and oversees the city manager, who is appointed by the mayor.
Bradley was first elected to the Compton City Council in 1991 and, from 1993 to June 30, 2001, served as the City's elected mayor. Rahh was elected to the city council in June 1999, the same month Bradley appointed Johnson city manager.
In July 1999, the city council unanimously passed a resolution authorizing the City to obtain corporate credit cards from specified issuers for the use of the city manager and city council members, including the mayor. The resolution established a policy for the use of the credit cards: Section 5 of the resolution expressly directed that "the corporate credit cards be utilized solely for approved City business related expenses." (Italics added.) The resolution also provided, in section 6, that "each card holder is required to account for all expenses and will be held personally liable for any unauthorized charges."
The credit card resolution was prepared by former City Controller
Helen Tyler, at Johnson's request. The city controller's office
routinely drafted resolutions for the city council concerning the
budget, appropriations limit, auditors or purchases over $5,000.*fn3
The city attorney reviewed the credit card resolution
only for legality and form and was present at the council meeting when
the resolution passed.
Prior to the resolution's passage, the City had a travel request procedure that provided its officials with advances to pay for lodging, meals and transportation on City-related trips. Under the City's written travel policy, air travel was limited to the lowest coach fare and meal expenses were limited to a $75 per diem ($15 for breakfast, $25 for lunch and $35 for dinner). Under the travel advance procedure, the city council approved the business trips, the city manager or his designee approved individual travel requests and the city controller verified that funding for the trip was available before the travel advance was processed. The travel advance check was made directly payable to the city official so that he or she could cash the check and use the funds to pay for the approved travel expenses. If a person overspent the itemized allowance, he or she could request reimbursement upon return by submitting receipts and going through the requisition and approval process. The City required receipts for travel only if the official sought to be reimbursed for additional travel expenditures following a trip.
After the city council adopted the credit card resolution, Johnson secured corporate credit cards for himself, the mayor and other council members pursuant to the resolution. However, the City continued its practice of providing travel advances to these officials.*fn4
Normally, all incoming mail for the City was delivered to the city clerk's office for sorting and routing to the various municipal departments. When the first corporate credit card bills started arriving in October 1999, the bills were delivered to the city clerk's office. Out of curiosity, then-City Clerk Charles Davis opened a credit card statement addressed to Johnson and noticed a charge for a tuxedo rental. The tuxedo charge captured Davis's attention because it did not appear to be related to City business. Around this time, Tyler questioned Johnson about his ordering a second set of credit cards, and Johnson told her "he could do what he wanted to do."
Tyler later became aware of credit card charges that Johnson had incurred while attending a Congressional Black Caucus (CBC) conference, in Washington, D.C. The statement included the tuxedo rental charge, along with charges for a rental car and hotel stay. The tuxedo rental appeared to Tyler to be a personal expense, and Tyler was aware that Johnson had received a travel advance for the rental car and hotel expenses. Tyler confronted Johnson about these items. Johnson told Tyler he discovered he needed a tuxedo while on the trip and decided to rent one. Johnson promised to write a check for the tuxedo rental charge but Tyler never received it. Soon afterwards, Tyler left her City post.
In November and December 1999, KCOP Channel 13, a local television
station, submitted two requests to the city clerk for access to City
credit card records under the California Public Records Act.*fn5
Davis forwarded the requests to Johnson's office. Davis
did not know if the City ever replied to the public records
After the KCOP public records requests and following a meeting with Bradley, Johnson directed the city clerk to send all credit card bills directly to the city manager's office. The stated rationale was to avoid distributing credit card numbers and information to the public. Davis ignored this directive and continued to route credit card statements to the city controller's office. The city controller's office, however, forwarded the credit card bills, unopened, to the city manager's office.
Upon receiving credit card bills, Johnson's special assistant, Linda Timmons-Iverson, submitted them to Johnson for review. At Johnson's direction, Timmons-Iverson then redacted the account number and purchase information from the bills and forwarded only a redacted copy of the statements to the city controller to process pay warrants for the bills. Timmons-Iverson kept the original unredacted credit card statements in a file in the city manager's office.
In May 2000, Johnson designated Tana McCoy (Bradley's sister), an assistant to the Compton City Council, as the person in charge of processing credit card payments for the mayor and other city council members. Timmons-Iverson continued to process payments for Johnson's City credit card. McCoy's duties included making travel arrangements, processing office payments and receiving mail for council members. McCoy's practice was to give the card holder a copy of his or her corporate credit card statement for review upon receipt. Afterwards, at Johnson's direction, McCoy redacted the expenditures section and all but four digits of the credit card number before sending a redacted copy of the statement to the city controller for authorization of payment. McCoy followed Johnson's directive from May 2000 through at least September 2001.
In June 2000, acting City Controller Marilynn Horne, Tyler's successor, received a request for a pay warrant from the city manager's office. Attached to the request was a redacted credit card statement signed by Johnson and a colleague. Horne objected to issuing the pay warrant because the payment information on the statement had been concealed. Horne spoke with then-assistant city manager Laurence Adams, who approved the payment. Horne was still not satisfied and insisted that the authorization be put into writing because she wanted "something for her files." As a result, Adams, and later Johnson, signed a memorandum addressed to Horne authorizing payment of redacted credit card bills. The memorandum stated that the original unredacted credit card statements were being retained by the city manager's office "for security reasons." Subsequently, Horne asked Timmons-Iverson and McCoy for access to the unredacted statements in order to have something to "back up" the credit card payments and was told she could not have the statements.
On three occasions in 1999 or 2000, Davis spoke with Johnson about Johnson's misuse of the corporate credit cards. Once, Davis asked Johnson if he was "prepared to go to jail for this." Johnson did not reply. Davis also confronted all three appellants during an executive session of a city council meeting in October 1999, after the first credit card bill had arrived at the City. Davis warned appellants that they should be careful in using the corporate credit cards or "somebody was going to go to jail." Rahh responded by saying, "We're grown."
In late 1999, Compton City Treasurer Douglas Sanders complained to the Los Angeles District Attorney's Office that appellants and others were using City credit cards for personal expenses and double-billing the City for their travel expenses. The district attorney's office opened an investigation on the basis of the information Sanders provided. In May 2001, investigator Frank Watler, a former Los Angeles County sheriff's deputy employed by the district attorney's office, took over the investigation.
In September 2001, Watler obtained a search warrant seeking financial records from 11 locations in Compton, including City Hall and various banks. Watler and a team of investigators seized the City's banking records, credit card information and travel-related documents for the period from July 1, 1999, through September 17, 2001, the date of the search warrant. Watler later reviewed the seized documents and compiled a list of questionable charges.
At Watler's request, the Los Angeles County grand jury issued subpoenas for the vendor documents relating to each of the questioned charges. After obtaining the vendor documents, Watler enlisted the aid of Jane Ngo, an investigative auditor for the County of Los Angeles. Watler and Ngo divided the investigation so that Watler investigated apparent personal expenses and Ngo potential double-billing by appellants and others. Watler reviewed credit card charges and compared them to vendor receipts to prepare a list of personal expenses charged to the City credit cards. Ngo reviewed 57 bankers' boxes of records and reduced the information to a comprehensive accounting spreadsheet for each business trip taken by appellants and others. Ngo determined that as to all defendants who were ultimately indicted by the grand jury, and independent of any reimbursements, a total of $20,833.34 in travel funds had not been used for their intended purpose.
Ngo also prepared a report of reimbursements to the City from appellants. She separated the reimbursements into those she could connect with a specific event and those that she could not connect with any specific event. Ngo found that many of the reimbursements occurred after Bradley left office and after a new mayor succeeded Bradley.
Watler and Ngo's investigation revealed, and the prosecution's evidence at trial showed, that appellants used their City credit cards to charge the City for personal expenses and to engage in multiple instances of double-billing.
Johnson charged over $10,000 in personal expenses to his City credit card and double-billed the City almost $6,000 for travel expenses in the period from September 1999 to May 2001. As discussed, post, Johnson paid $5,000 directly to one of the corporate credit card issuers in February 2001. In July 2001, Johnson repaid the City $525 for one of his trips. In July and August 2001 and in February and June 2002, Johnson made almost $18,000 in reimbursements to the City, which Ngo could not link to any particular expenditure.*fn6
Rahh charged over $7,000 in personal expenses on his City credit card and double-billed the City about $6,600. Rahh did not repay the City for any specific trip but made reimbursements of about $5,500 in the latter part of 2001 and in 2002. Rahh repaid the City $2,600 of that amount within two days of the new mayor's taking office in July 2001.
Bradley charged over $3,800 in personal expenses on his City credit card, double-billed the City over $3,700 and in addition failed to return travel advances for two conferences that the jury could infer he failed to attend. Bradley repaid the City $300 for one of his trips in December 1999. He made $5,600 in miscellaneous reimbursement payments in September 2000 and September 2001.
Over the course of a three-month trial, the prosecution put on extensive testimony from Watler and Ngo and present and former City officials and employees, as well as numerous vendors and other witnesses, to establish appellants used their City credit cards to ...