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People v. Hubbard

Supreme Court of California

June 16, 2016

THE PEOPLE, Plaintiff and Respondent,
JEFFREY HUBBARD, Defendant and Appellant.

         Superior Court Los Angeles County, Nos. SA075027, B239519, Ct.App. 2/1 BA382926 Stephen A. Marcus Judge

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         Hillel Chodos and Philip Kaufler for Defendant and Appellant.

         Kamala D. Harris, Attorney General, Dane R. Gillette and Gerald A. Engler, Chief Assistant Attorneys General, Lance E. Winters, Assistant Attorney General, Lawrence M. Daniels, Margaret E. Maxwell, Eric E. Reynolds and Dana Muhammad Ali, Deputy Attorneys General, for Plaintiff and Respondent.


         Cuéllar, J.

         In this case we must determine the scope of liability under a criminal statute enacted in 1872 proscribing the misuse of public funds. Penal Code section 424 applies to “[e]ach officer of this state, or of any county, city, town, or district of this state, and every other person charged with the receipt, safekeeping, transfer, or disbursement of public moneys.” (Pen. Code, § 424, subd. (a) (section 424(a)).)[1] Before us are two questions arising from this provision. The first is whether the statute applies to all public officers, or only to those “charged with the receipt, safekeeping, transfer, or disbursement of public moneys.” Because we hold that section 424 applies only to those public officers imbued with such responsibility over public moneys, we must

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answer a second question: whether sufficient evidence supported the jury’s verdict finding that defendant Jeffrey Hubbard, who served as superintendent of the Beverly Hills Unified School District (the District), was charged with the “receipt, safekeeping, transfer, or disbursement” of public funds. In light of Hubbard’s explicit contractual responsibilities to oversee the “budget and business affairs” of the District, testimony that superintendents like Hubbard owe a duty to safeguard school district funds, and Hubbard’s responsibility to ensure such public funds were spent in accordance with the law, we hold the evidence was sufficient.

         Accordingly, we reverse the judgment of the Court of Appeal and remand the case for further proceedings consistent with this opinion.

         I. Background

         In a consolidated information and indictment filed on January 3, 2012, the District Attorney of the County of Los Angeles charged Hubbard with three counts of misappropriating public funds in violation of section 424(a) 1. The charges were tried to a jury, which found Hubbard guilty on the first two counts and not guilty on the third. The following facts emerged at trial.

         Hubbard served as superintendent of the District from July 1, 2003, to June 30, 2006. In that role, Hubbard was chief executive officer of the District, overseeing the various departments therein. Those departments included human resources, business, and accounting. Among the duties listed in Hubbard’s employment contract was the responsibility to provide leadership and direction ensuring successful policy implementation in the area of “budget and business affairs.” Hubbard was also explicitly responsible under his employment contract for taking the lead on financing for school facilities. Joseph Jones, assistant executive director for the Association of California School Administrators (ACSA), testified that superintendents need to know the business side of running a school district, including “where all the finances come through and the revenues come through so [superintendents] can expend those revenues on behalf of schoolchildren.” Through courses taught by ACSA, superintendents learn about how state budgeting affects their districts, how to expend public funds, and how to use those funds on behalf of the students they serve.

         In those same courses, superintendents are instructed that “they have a fiduciary responsibility to protect the funds of the school district in which they serve.” Hubbard, who taught some of these courses, testified that he had discussions with his student administrators –– who were training for careers in education administration –– about their ethical and legal obligations with respect

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to public funds. Hubbard testified further that, pursuant to his duty under the law, he had familiarized himself with the rules governing superintendents.

         During Hubbard’s tenure as superintendent, Karen Christiansen worked for the District as the director of planning and facilities. Christiansen’s contract provided for an annual salary of $113, 000 and a monthly automobile allowance of $150. In late 2005 and early 2006, Hubbard wrote two memoranda regarding Christiansen’s compensation. These directives, written on District letterhead and in Hubbard’s official capacity as “Superintendent of Schools, ” proved central to the prosecution’s case against him.

         The first memorandum, dated September 29, 2005, included only two short sentences. Hubbard wrote: “Please note that effective September 1, 2005, Ms. Christiansen is to receive a $500.00 auto allowance per month. Thank you.” This memorandum, which Hubbard initialed, was addressed to Melody Voyles, who worked in payroll. Copied on the memorandum were Sal Gumina, the assistant superintendent for human resources, and Nora Roque, the human resources coordinator. The recipients interpreted the memorandum as a directive, which they were expected to follow. Hubbard testified that Christiansen’s monthly auto allowance was augmented to reflect an increase in her travel responsibilities after she took on additional work previously performed by a construction management firm up until fall 2005.

         In the second memorandum, dated February 6, 2006, Hubbard wrote: “Please note that Ms. Christiansen is to receive a $20, 000 stipend. Thank you.” This memorandum, which Hubbard also initialed, was addressed to Roque and copied Voyles, both of whom interpreted it as a directive. No assistant superintendent was included on this memorandum. Hubbard testified that the stipend was intended to compensate Christiansen for additional work she had performed following the construction management firm’s termination.

         Voyles indicated that “from time to time” she received direction from the superintendent to change an employee’s pay. When she did, she sought to comply with her superior’s instruction. Roque also testified that she had received similar requests for providing or adjusting employee stipends. Accordingly, memoranda in this case did not raise any red flags in the minds of Voyles and Roque; they were simply following Hubbard’s orders –– orders that, according to Hubbard’s testimony, the superintendent expected his subordinates to carry out. There was no indication that Hubbard considered the content of the memoranda, or the fact he had written them, to be unusual.

         The parties do not dispute that both the increased auto allowance and the stipend required approval by the District’s Board of Education (the Board), a

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five-member body that held meetings twice a month. Although Hubbard was responsible for preparing an agenda for the Board in advance of each meeting and for implementing the Board’s decisions, he lacked the unilateral authority to order either payment. The Board would discuss confidential matters, including employee compensation, in closed session prior to the open, public portion of the meeting, but any decision on such matters had to be ratified by a Board vote in open session. Hubbard was responsible for ensuring that minutes were taken and that those minutes accurately reflected what was approved during Board meetings, including any public expenditures. As superintendent, Hubbard attended both the closed and open sessions of the regular Board meetings.

         In order for the Board to approve a change in an employee’s compensation, the change had to be included in a personnel report. The superintendent would direct the human resources department to prepare such personnel reports. Once the human resources department had compiled the necessary paperwork, the reports would be submitted to the superintendent for review. It was the superintendent’s responsibility to ensure all personnel reports were then included in the packet of materials the Board would receive prior to each meeting.

         Christiansen received both the $500 monthly auto allowance and the $20, 000 stipend. A central point of contention at trial was whether or not the Board ever approved either payment. Two Board members testified that the Board never discussed or approved either the auto allowance or the stipend. Other personnel from the District - including Gumina, Roque, and Voyles - either had no memory of the payments or the procedure that had led to Christiansen’s receiving them, or had no knowledge whether the payments had been approved by the Board. The District’s assistant superintendent of business services testified that District personnel had searched the Board minutes from meetings “in and around” the time of the auto allowance and stipend and did not find the payments mentioned in the minutes from those meetings. The prosecution introduced exhibits containing agendas, minutes, and personnel reports from a number of the Board meetings that occurred around the time Hubbard prepared the memoranda regarding the payments to Christiansen. These materials contained no mention of either the auto allowance or the stipend.

         Hubbard testified that the Board had discussed both the auto allowance and the stipend in closed session. According to Hubbard, there were no objections to either payment, so he prepared the September 29 and February 6 memoranda directing that the payments be made. The memoranda were either addressed or copied to individuals in the human resources department, which would have been responsible for preparing the personnel reports had any been

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submitted to Hubbard for presentation to the Board. Hubbard admitted there was no documentation indicating that the Board ...

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