Hinds v. State

• Decision Date: 02 November 1982
• Docket Number: 6 Div. 545
• Citation: 423 So.2d 1382
• Parties: Donald E. HINDS v. STATE.
• Court: Alabama Court of Criminal Appeals

Page 1382

423 So.2d 1382

Donald E. HINDS v. STATE.

6 Div. 545.

Court of Criminal Appeals of Alabama.

Nov. 2, 1982.

Rehearing Denied Dec. 28, 1982.

L. Drew Redden and Gerald L. Miller of Redden, Mills & Clark and Gary Smith, Birmingham, for appellant.

Charles A. Graddick, Atty. Gen., and Joseph G.L. Marston, III, Asst. Atty. Gen., for appellee.

BOWEN, Judge.

The defendant was indicted and convicted for two separate cases of embezzlement in violation of Alabama Code Section 13-3-20 (1975). Sentence was two years' imprisonment in each case. Six issues are presented on appeal.

I

Initially, the defendant argues that the evidence is insufficient to support his convictions because there is no evidence of fraudulent intent and nothing to connect him with any embezzlement conspiracy.

Embezzlement is a statutory crime defined by Section 13-3-20:

"Any officer, ... of any incorporated company, ... who embezzles or fraudulently converts to his own use or the use of another, or fraudulently secretes with intent to convert to his own use or the use of another, any money or property which has come into his possession by virtue of his office, agency, employment ... shall be punished, on conviction, as if he had stolen it."

In order to sustain the convictions as charged, it was essential that the prosecution establish (1) that the defendant was an officer, agent, clerk, employee or servant of the corporation Life Insurance Company of America; (2) that certain money or checks came into his possession by virtue of his employment; and (3) that he fraudulently converted to his own use or the use of another, or fraudulently secreted with the intent to convert to his own use or the use of another, certain money or checks which came into his possession. Pullam v. State, 78 Ala. 31, 33 (1884); Kramer v. State, 16 Ala.App. 456, 458, 78 So. 719, cert. denied, 201 Ala. 700, 78 So. 990 (1918). In substance, the first indictment charged that the defendant as an officer of Life Insurance Company of America embezzled a company check in the amount of $18,160.40 made payable to Alabama International Services, Incorporated. The second indictment charged that the defendant as an officer of the insurance company embezzled $62,283.92 in checks or money between April 1, 1978, and August 31, 1978.

After the State rested its case in chief, the defendant made a motion to exclude. It then became the duty of the trial court to determine if there was any evidence, even though entirely circumstantial, that the defendant was guilty. Parker v. State, 395 So.2d 1090, 1099 (Ala.Cr.App.1980), cert. denied, 395 So.2d 1103 (Ala.1981). In determining whether the trial court correctly overruled this motion, this Court can only consider the evidence which was before that court at the time the motion to exclude was made. McCoy v. State, 397 So.2d 577, 585 (Ala.Cr.App.), cert. denied, 397 So.2d 589 (Ala.1981). In making such a consideration, this Court must accept as true the evidence introduced by the State, must consider that evidence in the light most favorable to the prosecution, and must accord the State all legitimate inferences arising therefrom. Johnson v. State, 378 So.2d 1164, 1169 (Ala.Cr.App.), cert. quashed, 378 So.2d 1173 (Ala.1979).

By its very nature, the State's evidence was confusing and complex, involving several corporations, numerous financial transactions and diverse commercial activities. At the risk of oversimplifying, we include in this opinion only a brief skeletal outline of the State's evidence.

In January of 1976, the defendant was promoted by the Board of Directors to vice president and chief executive officer of Life Insurance Company of America. At this time the insurance company had no president. In February of 1978, the defendant became the president of the insurance company. The defendant had been in the accounting department of insurance companies since 1954 and had "a general or thorough understanding of insurance accounting principles."

Although the insurance company received monthly premiums from the holders of its life insurance policies, its main assets were its holdings at Point Aquarius, a resort area near Gadsden. Due mainly to the poor financial condition of Point Aquarius, in 1975 the insurance company's financial condition was in an "obvious mess" which became progressively worse as time passed. In 1977-78, the insurance company was "technically insolvent" and its financial condition was "very serious". By December 31, 1977, its capital was impaired and its liabilities were $850,000.00 greater than its assets. In September of 1978, it was placed under the supervision of State Department of Insurance. On December 15, 1978, the Life Insurance Company was placed in receivership and the management and control of the corporation were taken over by the State Insurance Department.

The Life Insurance Company owned certain lot installment sales contracts at Point Aquarius. Under this type contract, the purchaser made monthly payments to the owner of the contract on the installment price of the lot or condominium and received title to the property only after the full purchase price had been paid. Royal American Corporation of Louisiana and Continental Security Life Insurance Company of Missouri owned other sales contracts. Birmingham Trust National Bank held a first mortgage or lien on some of the lots in order to secure a bond issue at Point Aquarius.

Mainly for practical reasons, an oral agreement was reached between the defendant and Royal whereby the Life Insurance Company would collect the monthly payments on both its own and Royal's contracts. The Life Insurance Company would retain 15% of the monthly payments collected on Royal's lot sales installment contracts and remit the remainder to Royal. Under this agreement, the Life Insurance Company actually made some collections and remittances to Royal.

On June 3, 1977, the Life Insurance Company opened a special checking account for these monthly payments it was collecting by transferring $9,674.34 from its main account into the new L.I.C.A. Lot Collection Account. This account existed until August 23, 1977--a total of almost three months.

At this time, the Life Insurance Company had six other checking accounts which had either ledger sheets or cash receipts and disbursements journals--recognized as standard methods of record keeping. However, the accounting for the L.I.C.A. Lot Collection Account was kept on a page of a "steno-type pad".

In August of 1977, the defendant, Richard Prince and Joseph Aldio formed Alabama International Services, Incorporated (AIS), for the purpose of making the collections on the lot installment sales contracts. Although there was no legal relationship between AIS and the Life Insurance Company, the three incorporators of AIS were also officers or employees of the Life Insurance Company. The defendant, the vice president of the Life Insurance Company, became the president of AIS. Prince, the comptroller and office manager of the Life Insurance Company, became the secretary and treasurer of AIS. Aldio, a convicted felon employed by the Life Insurance Company as a "policy consultant", became the vice president of AIS.

Royal had made its collection agreement with the Life Insurance Company and not with AIS. Royal never specifically authorized AIS to collect any money owed to Royal although Royal did receive payments from AIS and made no objection when the collection function was turned over to AIS.

On August 23, 1977, the defendant and Prince wrote a check on the Life Insurance Company's Lot Collection Account for $18,160.44. This check closed the Lot Collection Account. Of this total amount, $11,102.41 was owned by the Life Insurance Company. The remainder constituted proceeds from the collection of lot installment sales contracts owned by other corporations minus the Life Insurance Company's 15% collection fee.

That same day and in the same bank, the defendant opened an account in the name of AIS and deposited $8,160.44. With the remaining $10,000.00, he purchased a certificate of deposit for AIS. The conversion of this $18,160.44 constitutes the basis of the first indictment.

In the following three months, the $10,000.00 certificate of deposit was used to secure three loans, officially in the name of AIS, totaling $10,000.00. A cashier's check resulting from the September loan was made payable to Aldio and was signed by the defendant and Aldio. The proceeds of the October and November loans were paid out in the form of cashier's checks payable to AIS and endorsed by Aldio and Prince.

On August 31, 1978, a little over one year after the AIS account had been opened, it was overdrawn in the amount of "six hundred and some odd dollars." This account was examined by an examiner for the Alabama Securities Commission who testified that the total of all the funds deposited in the AIS account between August 23, 1977, and August 31, 1978, to which the Life Insurance Company was entitled and which it had not received amounted to $123,863.92. During this same period numerous checks totaling $171,818.91 were drawn against the AIS account and made payable to Aldio or to cash. Of the ones payable to cash, more than 90% were endorsed by Aldio. During this time (August 23, 1977 and August 31, 1978), only two checks were signed by the defendant: a check for $3,000.00 payable to Aldio, signed by Aldio and the defendant and dated September 27, 1977, and a $150.00 check payable to Aldio signed by Prince and the defendant and dated September 30, 1977.

The securities examiner also analyzed the AIS account for the period between April 1, 1977, and August 31, 1978--the period covered by the second indictment. He testified that $76,130.51 represented the net Life Insurance Company funds deposited in the AIS account and not returned to the Life Insurance Company. During this same period, $97,378.21 was withdrawn from the AIS account by checks...