Investigation and Prosecution of a Complex Financial Case

1. Investigation and Prosecution of a Complex Financial Case Ivan Orton Senior Deputy Prosecuting Attorney Economic Crimes Unit King County Prosecuting Attorney ivan.orton@kingcounty.gov 206 296-9082

3. 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

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

5. 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 Superior Court.

6. William Findley

7. State Auditor’s Report

8. $ Process $

9. Bookkeeping

10. 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

11. 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

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

15. Citizenship Award

16. Legal Theory

17. Three Theories of Theft • By Deception • By Taking • By Exertion of Unauthorized Control

18. 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, custody, or control to secrete, withhold, or appropriate the same to his or her own use or to the use of any person other than the true owner or person entitled thereto

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

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

21. A Lawyer Will Always Object

22. Any Kind of Objection

23. 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

24. 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, 956, 411 P.2d 157 (1966)). In re Estate of Palmer, 145 Wash.App. 249, 263, 187 P.3d 758 (2008)

25. 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 attorney-in-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)

26. 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

27. 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)

28. 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

29. 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)

30. 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)

31. 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)

32. 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)

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

34. 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

35. 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

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

37. 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

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

39. 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

40. 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

41. 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

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

43. Master the Detail

44. Bank Transactions

45. Credit Card Transactions

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

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

48. 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

49. 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

50. 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?