People v. Dillard
| Decision Date | 29 March 2018 |
| Docket Number | A141998 |
| Court | California Court of Appeals Court of Appeals |
| Parties | The PEOPLE, Plaintiff and Respondent, v. Nanette Sheree DILLARD, et al., Defendants and Appellants. |
Certified for Partial Publication.*
John Doyle, under appointment by the Court of Appeal, for Defendant and Appellant Paul Daniels.
Violet Elizabeth Grayson, for Defendant and Appellant Nanette Sheree Dillard.
Kamala D. Harris and Xavier Becerra, Attorneys General, Gerald A. Engler, Chief Assistant Attorney General, Jeffrey M. Laurence, Senior Assistant Attorney General, René A. Chacón and J. Michael Chamberlain, Deputy Attorneys General, for Plaintiff and Respondent.
Nanette Sheree Dillard and Paul Daniels appeal their convictions, following a jury trial, of crimes related to their work at an anti-poverty agency, the Associated Community Action Program (ACAP or the Agency). We conclude two of appellants' convictions were preempted by federal law and reverse these convictions. We otherwise affirm.
Dillard and Daniels were charged by amended information with the following:
Count 1: Conspiracy to commit grant theft by false pretenses ( Pen. Code, §§ 182, subd. (a)(1), 487, subd. (a) )1 , with overt acts of drafting, signing, and delivering a letter to the United States Department of Health and Human Services (HHS) "falsely attesting" that ACAP had more than $426,000 in " ‘non-federal match funds' " in a Citibank account, and sending a draft of such a letter to a Citibank manager.
Count 2: Grand theft by false pretenses ( § 487, subd. (a) ) by unlawfully taking grant funds from HHS. This count included an allegation that the property taken exceeded $200,000 (§ 12022.6, subd. (a)(2) ).
Count 3: Making a false account of public moneys (§ 424, subd. (a)(3) ) by signing and sending false and inaccurate letters to HHS. A third co-defendant, Vivian Rahwanji, was also charged with this count. Rahwanji entered into a plea agreement with the People on the eve of trial and, as part of this agreement, testified as a prosecution witness.
Count 4: Using public moneys for a purpose not authorized by law (§ 424, subd. (a)(2) ), by improperly using over $280,000 of funds intended for a HHS grant program to fund Agency payroll and other Agency expenses.
In addition, Dillard was charged with the following:
Count 5: Appropriating public moneys to her own use (§ 424, subd. (a)(1) ), by instructing employees to work on her personal residence at below-market rates and obtaining reimbursement for improper business expenses, such as massages and expensive meals.
Count 6: Preparing false and ante-dated documentary evidence (§ 134), by preparing a memoranda regarding the residency status of Agency clients and an agenda of a seminar at a hotel.
Following a lengthy trial, the jury convicted appellants of theft by false pretenses (count 2) and making a false account of public moneys (count 3), and convicted Dillard of preparing false documentary evidence (count 6). The jury acquitted appellants on all remaining counts.
ACAP was an anti-poverty agency created pursuant to a joint powers agreement between Alameda County (the County) and several cities in the County. A governing board (the Board) consisted of representatives from each of the municipalities and, among other powers, selected the Agency's executive director. Dillard was appointed the Agency's interim executive director in 2004 and its executive director in 2005. Daniels was hired as an administrative assistant at the Agency in 2004, and was promoted to grants manager the following year. Daniels and Dillard married in 2007.
In June 2005, the Agency sought, and was awarded, a five-year, $500,000 Assets for Independence (AFI) grant from HHS. Two HHS employees testified about the rules governing AFI grants: Katrina Morgan, an HHS grants management officer, and Anne Yeoman, a 10-year contract employee with HHS who worked primarily on the AFI program. AFI grants are awarded to organizations or agencies to fund programs that help low-income people build assets. We will refer to the organizations or agencies administering the AFI programs as "grantees," and the low-income individuals served by these programs as "savers." In an AFI program, savers deposit money in a designated individual bank account. These deposits are matched with federal AFI grant funds and an equal amount of nonfederal funds. The matched deposits can be withdrawn for approved uses, including higher education, starting a business, or buying a house.
Grantees do not receive the federal AFI money when the grant is awarded. Instead, during the five-year grant period, grantees periodically "drawdown" some or all of the federal grant funds into a dedicated bank account maintained by the grantee, called the reserve account. A grantee can only drawdown federal funds for which it has an equal amount of nonfederal funds on deposit, referred to as "matching nonfederal funds." Before each drawdown, grantees must submit to HHS a letter requesting the drawdown and a letter from the bank holding the reserve fund confirming the presence of matching nonfederal funds in that account. AFI federal grant funds must be drawn down into the reserve account within the five-year grant period, and the distribution of grant funds to savers must be completed by the end of an additional year. Grantees can spend no more than 15 percent of the drawn down federal AFI funds on program administration; the remainder must be used to match saver deposits. HHS provides grantees with an "AFI Grantee Handbook," an AFI resource center available to answer grantee questions by phone or email, and in-person trainings at grantee conferences.
The Agency's AFI reserve account, and the hundreds of individual saver deposit accounts participating in the Agency's AFI program, were held at a Citibank branch. The reserve account was the "umbrella" account, and the individual saver accounts were attached to the reserve account. Vivian Rahwanji was the manager of that Citibank branch. Dillard was the sole signatory on the AFI reserve account, and both she and Daniels had access to the AFI account records.
The Agency's five-year AFI grant period ended on June 14, 2010; this date was the last day the Agency could drawdown federal AFI funds. As of the beginning of that month, the Agency had drawn down less than $75,000 out of the $500,000 available federal AFI funds. On June 10, although the Agency only had approximately $47,000 in its AFI reserve account, Daniels emailed Rahwanji a template letter to HHS stating the Agency had $426,874.44 of "non-federal match funds" on deposit in its AFI reserve account and requested she "place the letter on Citibank stationary [and] sign it."2 Rahwanji did so. Daniels sent the Citibank letter to HHS and HHS transferred the requested federal AFI grant funds to the Agency's reserve account. The prosecution argued this letter was the basis for the theft by false pretenses and false account of public moneys counts (counts 2 and 3)—even though the letter was signed by Rahwanji, the People argued appellants prepared the letter knowing Rahwanji would "rubber-stamp" it and/or aided and abetted her act.3
In August of 2010, the Agency did not have enough funds to meet payroll and AFI federal grant funds were used for this purpose. By February 1, 2011, approximately $280,000 of the federal AFI funds had been used for payroll and approximately $40,000 had been transferred to an Agency "petty cash" account.4 The People confirmed in closing statements that they were not alleging appellants used AFI funds for their own personal use.
On February 2, 2011, the Board placed Dillard on administrative leave. Both appellants were subsequently terminated.
Following appellants' termination, an independent audit determined the Agency was in financial disarray and the Board decided to dissolve it. The interim executive director in charge of overseeing the Agency's dissolution determined that out of the nearly $500,000 in drawn down federal AFI funds, the Agency either lacked nonfederal matching funds for or had used for non-AFI purposes approximately $435,000. The County informed HHS of this and HHS demanded the Agency return these funds. The Agency had approximately $117,000 left in the AFI reserve account and this amount was paid back to the federal government, leaving a remaining liability of approximately $317,000.
Count 6 alleged Dillard prepared two ante-dated documents. The first related to reimbursed expenses. On August 26, 2010, Dillard paid for meals, drinks, and massages for herself and the Agency's deputy director at a local hotel and spa, and was subsequently reimbursed by the Agency for these expenses. On February 3, 2011, the day after she was placed on administrative leave, Dillard emailed her assistant asking for "copies of all my expenses that have been submitted." The following day, Dillard emailed her assistant a document purporting to be an "agenda" for an "ACAP Organizational Management" seminar held on August 26, 2010 at the hotel where the expenses had been incurred. Dillard's email asked her assistant to "[p]lease attach to expenses." Her assistant, who made all the arrangements for the hotel visit, had never seen the agenda before. The deputy director testified that several aspects of the agenda did not accurately represent what happened that day.
The second document related to an Agency program called CREW, which provided job training and employment to eligible participants living in the County. Dillard's nephew and his friend were participants in the CREW program but their June 2010 Agency paperwork stated they lived outside the County. In February 2011, the day after Dillard was placed on...
To continue reading
Request your trial
-
People v. Hamilton
...fraud against federal agencies is hardly ‘a field which the States have traditionally occupied’ "]; People v. Dillard (2018) 21 Cal.App.5th 1205, 1223-1224, 231 Cal.Rptr.3d 106 [a state law prosecution arising from false statements defendants made to the federal Department of Health and Hum......
-
The People v. Daniels
...2018, this court reversed appellant's convictions and all but one of Dillard's convictions as preempted by federal law. (People v. Dillard (2018) 21 Cal.App.5th 1205.) On remand, appellant filed a motion seeking the return approximately $2,500 he had paid in victim restitution; he also soug......
-
THE STRUCTURE OF CRIMINAL FEDERALISM.
...the defendant's theft conviction for forging military documents to obtain money from a veterans' charity). But see People v. Dillard, 231 Cal. Rptr. 3d 106. 112-23 (Cal. Ct. App. 2018) (holding that a state conviction for defrauding a U.S. Health and Hitman Services program was (340) See, e......