ORIGINAL PROCEEDING; petition for writ of prohibition. Bob S. Bowers, Jr., Judge. (Los Angeles County Super. Ct. No. BA382977)
The opinion of the court was delivered by: Johnson, J.
CERTIFIED FOR PUBLICATION
Petitioners Mark Breceda, Abe De Dios, Manuel Garcia and Rosemary Ramirez seek a writ of prohibition following the trial court's denial of their motion to dismiss an indictment on the ground that the district attorney's office failed to adduce potentially exculpatory evidence to the grand jury as is required by Penal Code section 939.71.*fn1 Petitioners contend that the indictment should therefore be dismissed. The People oppose the petition on several bases: (1) the legal issue is not ripe because the trial court did not make findings which could be the basis for a legal determination that section 939.71 applies; (2) the interoffice memorandum (which is one of two documents petitioners contend was exculpatory) was not exculpatory; (3) if the memorandum is deemed exculpatory, equivalent evidence was presented to the grand jury; (4) there has been no showing of substantial prejudice from the nondisclosure; and (5) the trial court's interpretation of "prosecutor" under section 939.71, subdivision (a), to mean only the district attorneys presenting to the grand jury and not the entire office of the district attorney is correct for the purposes of grand jury proceedings.
We hold that because the office of the district attorney withheld exculpatory evidence from the grand jury, thus causing prejudice to petitioners, the five counts in the indictment that allege that petitioners committed embezzlement must be vacated.*fn2
This petition arises out of a criminal prosecution against officials of the City of Irwindale (hereinafter "Irwindale"). On December 8, 2011, the office of the district attorney convened the grand jury to seek an indictment to charge petitioners Breceda, De Dios, Ramirez, and later Garcia with embezzlement of Irwindale funds by participating in excessively costly junkets to New York City paid for by third parties who were ultimately reimbursed with city funds and by claiming reimbursement from Irwindale per diem payments ostensibly for expenses which the council members had not paid out of their own pockets.
After the grand jury returned an indictment against all four petitioners,*fn3  petitioners moved to dismiss the indictment for the failure of the office of the district attorney to present certain exculpatory evidence to the grand jury. The motion was denied; this petition followed. We issued an order to show cause, the parties submitted briefs, and we heard oral argument.
We grant the petition and prohibit the prosecution of petitioners on counts 1, 2, 3, 4 and 5 of the December 12, 2011 indictment.
There is a legal difference between the ethical and potentially criminal violation of accepting and failing to report the gifts from third parties, on one hand, and the criminal act of embezzlement, on the other hand, which, as charged in this case, is a fraudulent and thus knowing appropriation of public funds for a use that is not within a defendant's due and lawful execution of his public office.
Before the grand jury, the office of the district attorney primarily focused on a theory of "double dipping," emphasizing the theory in the presentation of witnesses and documents, and largely--but not exclusively--devoting the opening statement and closing argument to that theory. The prosecution also argued and adduced evidence that petitioners Breceda, De Dios, Garcia and Ramirez enjoyed excessively expensive hotels, meals, and entertainment while on Irwindale business in New York City; further, the district attorney's office provided evidence that third-party financial consultants paid for these lavish junkets. Yet, we do not fail to recognize that the petitioners herein are not accused of violating the Fair Political Practices Act for taking gifts from third-party consultants and failing to report the gifts. Instead, they are accused of embezzlement, taking public funds for their private benefit, that is--for a use that is not within a defendant's due and lawful execution of his or her office.
Therein lies the crux of our analysis as to whether the district attorney's failure to present certain potentially exculpatory items of evidence to the grand jury was unduly prejudicial to the petitioners. While the prosecution's presentation to the grand jury provided some evidence that city funds were used to reimburse the third-party financial consultants who hosted those trips, the evidence before the grand jury that Breceda, Garcia and Ramirez knew of such reimbursements, and thus arguably had a fraudulent intent to deceive, was scarce, if not absent.
While one trip may have cost the city over $62,000, the prosecution focused on the requests of three petitioners for a $75 daily allotment for meal expenses and the fourth petitioner's approval of these allotments. Apparently, unable to provide documentation and testimony that Breceda, Garcia and Ramirez knew that public funds were being used to send them off to Broadway shows and steak dinners, the prosecution focused on the council members' per diem allotments. We cannot ignore the likelihood that the grand jury, hearing over and over again that three petitioners improperly obtained daily allotments of $75 (and that one petitioner authorized payment of these allotments) would infer that one who is dishonest about a small sum of money (the allotments) necessarily had a fraudulent intent to embezzle public funds when they accepted lavish benefits (large sums) from a third party. Without that "double dipping" hook, the district attorney's presentation to the grand jury on whether the petitioners knew the benefits they received in New York would be paid for with public funds was remarkably weak.
Although the prosecution provided a somewhat different picture of De Dios, with evidence that third-party invoices for trip expenses were addressed to De Dios and that he authorized the release of city funds to pay those invoices, the prosecution's main focus was to adduce testimony to taint him with the double-dipping "chum"--despite the prosecution's acknowledgement that De Dios did nothing to connect him with double dipping, except cut the per diem checks to the other three petitioners.
That is why we conclude that all petitioners were substantially prejudiced by the failure of the prosecution to provide two significant documents that arguably demonstrate that the petitioners acted in compliance with city policy when they sought the $75 per diem payments.
The facts are undisputed that, as Irwindale officials, petitioners traveled to New York City, annually from 2001 through 2005, to meet with bond raters for the purpose of raising the bond rating of the Irwindale. The indictment and presentation before the grand jury focused exclusively on expenses incurred in that time frame.
The subject indictment charges petitioners with five counts of embezzlement in their capacities as Irwindale officials. Petitioners moved to dismiss the indictment on various grounds, including the contention they raise here, that the prosecution violated its obligation to provide exculpatory evidence, and the omission was so prejudicial as to necessitate dismissal of the charges. The prosecution set forth evidence that petitioners went on several expensive junkets for which third-party financial consultants paid and were later reimbursed by Irwindale. The prosecution also adduced evidence that Irwindale provided Breceda, Garcia, and Ramirez with "$75 per diems," meal allotments for travel; that Breceda, Garcia and Ramirez retained the allotments up to $75 for each travel day, even when they did not pay for the meals out of pocket; and that De Dios authorized payment of the allotments. The prosecution adduced testimony that the allotments were contrary to city policy and were, at best, improperly allowed to occur with the consent of the city managers. Witnesses testified that neither the allotments nor the benefit of the junkets paid by third parties were reported to the Fair Political Practices Commission.
The grand jury indicted the petitioners for embezzlement, that is, fraudulently appropriating public property. Petitioners were not charged with violation of any of the statutes related to reporting to the Fair Political Practices Commission.
Petitioners moved to dismiss the five counts of the indictment on the basis that the prosecution's theory rested solely on double dipping, the misuse of the $75 allotment when petitioners had not paid for their own meals. Petitioners contended that the prosecution violated its statutory duty to present the grand jury with exculpatory evidence. This evidence consists of two Irwindale documents, a 2002 resolution and a 2002 city manager memorandum, which appear to state a policy or--at least--a practice that each Irwindale official is entitled to a daily $75 allotment while traveling on city business, even if that official's meals were paid for by a third party.
In opposition, the deputy district attorneys who appeared before the grand jury presented their declarations stating that they had no personal knowledge of the 2002 city manager's memorandum and the prosecution was not limited to the double dipping theory. After much discussion as to whether the theory of double dipping was the sole basis for the prosecution and whether the prosecutors violated their statutory duty, respondent court denied the motion to dismiss. This petition followed.
Petitioners contend that the prosecution violated its statutory duty to ensure the independence of the grand jury by withholding exculpatory evidence. They assert that this omission was so prejudicial as to require the dismissal of the five counts against petitioners.
Resolution and memorandum
On March 28, 2002, the Irwindale City Council passed, approved and adopted Resolution, No. 2002-17-1808, which provides:
"WHEREAS, the City of Irwindale ('City') has adopted a travel and meeting expense policy providing procedures for the expenditure and accountability of the City's funds for travel and meetings related to the proper business of the City; and
"WHEREAS, the City's travel and meeting expense policy provides that the rate at which the reimbursable expenses of mileage and meals incurred for City business by its officers, employees, commissioners and members of the City Council shall be established by City resolution; and
"WHEREAS, the City has reviewed actual expenses incurred by Council and staff members at recent conferences and determined that the current $50 per day rate does not cover current reasonable per diem actual expenses, and should be increased.
"NOW, THEREFORE, the City Council of the City of Irwindale finds, determines and resolves as follows:
"1. The mileage expense incurred by the officers, employees, commissioners and members of the City Council of the City for the proper business and benefit of the City shall be reimbursable by the City at the rate established by the Internal Revenue Service.
"2. The per diem rate for meals shall be seventy-five dollars ($75.00) per day.
"3. This resolution supersedes and replaces prior resolutions establishing the mileage reimbursement rate and per diem allowance."
The resolution was approved by Breceda, as mayor, and Garcia and Ramirez as members of the city council, along with council member Pat Miranda.
Via an interoffice memorandum dated July 25, 2002, City Manager Steve Blancarte*fn4 clarified the resolution, explaining that the per diem allowance was raised from $50 to $75, and adding, "'"Note that this allotment is to be provided regardless of the inclusion of meals at the conference or workshop. This interpretation is intended to partially offset the hardship incurred by those officials traveling overnight on city business."'"
At oral argument, Deputy District Attorney Carolyn Nakaki acknowledged that both the supervising attorney of the Fraud and Corruption Division and the investigator for that division knew of the 2002 resolution and the 2002 memorandum. The investigator, Roberto Allas, referred to both documents in his affidavit in support of a 2008 search warrant of the office, vehicle, and American Express credit card records of John Charles Fitzgerald, one of Irwindale's financial advisors.
Deputy District Attorney Max Huntsman began the proceedings by stating that the petitioners took public money and spent it on themselves in "fancy meals and trips to New York that were really entertainment for them." He did not refer to the petitioners as "targets" until he began to speak of their submission of reimbursement forms.*fn5
The first witness to testify before the grand jury was Robert Griego, Irwindale city manager from 1997 to 2000, who returned to that position "in 2004 or 2005." He testified that during his first tenure, city officials were required to submit receipts in order to be reimbursed for expenses. Reimbursement without receipts would have been against policy. When he returned to his position in Irwindale, he learned that the policy had been changed and that receipts were no longer required for reimbursement. Additionally, officials would be paid a set amount for daily expenses. Griego ...