People v. Draut

Decision Date15 June 1999
Docket NumberNo. A083931,A083931
Citation73 Cal.App.4th 577,86 Cal.Rptr.2d 469
CourtCalifornia Court of Appeals Court of Appeals
Parties, 99 Cal. Daily Op. Serv. 5626, 1999 Daily Journal D.A.R. 7127 The PEOPLE, Plaintiff and Appellant, v. Lawrence Alford DRAUT, Defendant and Respondent.

Bill Lockyer, Attorney General, Mia Anna Mazza, Deputy Attorney General, Attorney for Appellant.

Philip McGough, By appointment of the Court of Appeal under the First District Appellate Project Independent Case System, Attorney for Respondent.

HAERLE, Acting P.J.

I. INTRODUCTION

On May 23, 1997, Lawrence A. Draut (Draut) pleaded no contest to 6 of 53 counts charging that he fraudulently failed to report and remit state sales and unemployment insurance taxes between January 1, 1991, and January 19, 1996. Under a plea agreement, the other 47 counts were dismissed. On August, 4, 1998, the court sentenced Draut to seven years and four months in prison. Additionally, under Penal Code section 1202.4, 1 the court ordered Draut to pay $1,145,186.60 in restitution. At a subsequent sentencing hearing on August 5, the court, sua sponte, reduced the award to $150,000. The People appeal, arguing that the trial judge erred in reducing the award. We agree. Therefore, we reverse and remand with instructions to order restitution in the amount properly ordered on August 4, 1998.

II. FACTUAL AND PROCEDURAL BACKGROUND

Draut, as sole proprietor, operated a retail computer business in Santa Rosa and, at times, in Napa. On March 8, 1996, during consultation with a Santa Rosa police officer on another matter, Draut revealed that, for the five years from approximately 1991 through 1995, he had failed to pay state taxes connected with the business. The officer referred the case to the California Board of Equalization (BOE). BOE investigators determined that Draut had failed to remit over $1 million in sales tax collected from customers. With costs, the total loss to BOE came to about $1.12 million. Employment Development Department (EDD) investigators determined that, for brief intervals during that period, Draut had also failed to remit unemployment insurance taxes withheld from his employees' paychecks. EDD determined their loss, including investigative costs, to be around $37,000.

On September 13, 1996, the Sonoma County District Attorney filed a 43 count complaint against Draut, alleging that (1) he failed to pay these moneys, in violation of Revenue and Taxation Code sections 7152, subdivision (a) and 7153.5, (2) he aided and assisted in tax evasion in violation of Revenue and Taxation Code section 6071, (3) in doing so he committed grand theft, in violation of section 487, subdivision (a), and (4) the amount taken in that theft was greater than $150,000, in violation of section 12022.6, subdivision (b). On December 4, 1996, the same office charged Draut with five counts each of unemployment insurance tax evasion and of failing to withhold or pay over unemployment insurance tax, in violation of Unemployment Insurance Code sections 2117.5 and 2118.5, respectively. The various charges under each statute were substantively the same; each count covered a different tax quarter.

On May 23, 1997, Draut entered into a plea agreement under which he pleaded no contest to six of the counts against him, and the remaining counts were dismissed. With respect to the dismissed counts, the agreement included Harvey waivers. 2

On August 4, 1998, the court sentenced Draut to seven years and four months in state prison. This sentence consisted of the two-year middle term for the first offense to which he pleaded no contest, five consecutive two-year sentences, which under the sentencing statute 3 translated to one-third of the base term or eight months each, and a two-year enhancement for taking property of a value in excess of $150,000 (§ 12022.6, subd. (b)). The court also ordered Draut to pay restitution of $1,145,186.60, pursuant to section 1202.4 (the restitution statute). That amount represented the total estimated loss suffered by the victims of Draut's crimes, the BOE and the EDD.

On August 5, 1998, the parties came before the court again. The People sought an $11,000 increase in the restitution award, claiming that the Probation Department had calculated it erroneously. Instead, the trial judge responded by, on his own motion, reducing the restitution award to $150,000, stating that the full award would burden Draut forever, and would restrict him from pursuing a productive life after he served his jail sentence.

The People timely filed this appeal on August 6, 1998.

III. DISCUSSION

In reducing the restitution award, Judge Passalacqua, who had presided over Draut's trial and sentencing, stated, "In fact he's going to do seven years and four months. The fact that the Court ordered restitution of over a million dollars yesterday is almost preposterous.... [p] Once the man pays his dues to society for his indiscretions, then at that point he should be at least in a position to start life and live the rest of it in a normal fashion. And with a burden of $1,100,000 on his back, Mr. Draut is never going to get out from under the sentence of this Court. [p] This Court feels that the interest of justice warrants that a sum far less than $1 million be imposed. I thought about that last evening. Just like the man who gets out of jail, serves his time in prison and now wants to go to work and can't go to work because the Department of Motor Vehicles wants to punish him further by taking his driver's license. Things like that just are preposterous. They're not a deterrent to crime. I have yet to meet a dope salesman who says, 'I better not sell any, because the Department of Motor Vehicles wants my driver's license.' [p] Well, this man is in that same position, so to speak. This Magistrate will order restitution. And if those fellows from the Board of Control want to appeal it, let them go. I'm cutting it down to a hundred fifty thousand dollars." At the close of the judge's remarks, the People objected. Defense counsel was silent.

Subdivision (f) of the restitution statute states that, where a crime results in an economic loss to the victim, the court shall order the person convicted of that crime to pay full restitution to the victim for his loss, unless the trial court finds "compelling and extraordinary" reasons to order a lesser award. 4 (§ 1202.4, subd. (f), emphasis added; see also Cal. Const., art. I, § 28, subd. (b); 3 Witkin, Cal.Criminal Law (1999 Supp.) Punishment for Crime, § 1325A, subd. (e), p. 45["[t]o the extent possible, the restitution order must be prepared by the sentencing court ... and must be sufficient to fully reimburse the victim for every economic loss resulting from the defendant's criminal conduct"].)

The trial "court's allocation of restitutionary responsibility must be sustained unless it constitutes an abuse of discretion or rests upon a demonstrable error of law." (People v. S.S. (1995) 37 Cal.App.4th 543, 550, 43 Cal.Rptr.2d 768 [finding punitive and anti-recidivist rationale behind restitution limits trial court's discretion to award less than full restitution]; see also People v. Thygesen (1999) 69 Cal.App.4th 988, 992, 81 Cal.Rptr.2d 886 [concluding trial court's discretion is broad, but not unlimited]; People v. Ortiz (1997) 53 Cal.App.4th 791, 800, 62 Cal.Rptr.2d 66 [holding that the constitutional basis of the restitution statute requires that "the court must decide the amount of the loss on grounds [that] will withstand review for abuse of discretion"]; People v. Dalvito (1997) 56 Cal.App.4th 557, 562, 65 Cal.Rptr.2d 679 [holding that an abuse of discretion occurs when a restitution award is made without a factual or rational basis].) A trial court abuses its discretion when it determines an award amount using other than "a rational method that could reasonably said to make the victim whole" or when an award is arbitrary or capricious. (People v. Thygesen, supra, 69 Cal.App.4th at p. 992, 81 Cal.Rptr.2d 886.) The restitution statute requires that the trial court set forth its reasoning in the record when exercising this discretion. (§ 1202.4, subd. (f).) Examining the record before us here, we find that the trial court committed a demonstrable error of law and abused its discretion.

Subdivision (g) of the restitution statute indicates specifically that the defendant's "inability to pay" is not an extraordinary and compelling circumstance that would justify a court ordering less than full restitution. (§ 1202.4, subd. (g).) To permit this would ignore the fact that restitution is aimed at reversing the harm to the victim to the extent possible. (People v. Moser (1996) 50 Cal.App.4th 130, 135, 57 Cal.Rptr.2d 647.) Also, if the inability to pay were...

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