People v. Honig, No. C015357

• Court: California Court of Appeals
• Writing for the Court: Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Robert R. Anderson, Assistant Attorney General; SPARKS; NICHOLSON
• Citation: 48 Cal.App.4th 289,55 Cal.Rptr.2d 555
• Parties: , 111 Ed. Law Rep. 870, 96 Cal. Daily Op. Serv. 5920, 96 Daily Journal D.A.R. 9647 The PEOPLE, Plaintiff and Respondent, v. Louis HONIG III, Defendant and Appellant.
• Docket Number: No. C015357
• Decision Date: 07 August 1996

Page 555

55 Cal.Rptr.2d 555 48 Cal.App.4th 289, 111 Ed. Law Rep. 870, 96 Cal. Daily Op. Serv. 5920, 96 Daily Journal D.A.R. 9647 The PEOPLE, Plaintiff and Respondent,
v.
Louis HONIG III, Defendant and Appellant. No. C015357. Court of Appeal, Third District, California. Aug. 7, 1996.
Rehearing Denied Sept. 4, 1996.

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[48 Cal.App.4th 303] Quin Denvir, Sacramento, for Defendant and Appellant.

Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Robert R. Anderson, Assistant Attorney General, J. Robert Jibson, Deputy Attorney General, for Plaintiff and Respondent.

[48 Cal.App.4th 304] SPARKS, Associate Justice.

Defendant Louis (Bill) Honig III appeals from an order of probation entered after a jury found him guilty of four counts of making official contracts in which he had a financial interest in violation of Government Code sections 1090 and 1097. Defendant contends on appeal that the trial court erred in instructing the jury, in excluding certain evidence and in ordering restitution as a condition of probation. He further contends the transactions were grants rather than contracts and thus were beyond the scope of the charged crimes. Finally, he argues that the

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Attorney General lacked authority to prosecute this action. We conclude that the sentencing court erroneously believed that restitution was mandatory and consequently did not exercise its discretion in determining whether to impose such a condition. We shall set aside the restitution condition and remand the cause to the court for the purpose of exercising its discretion. In all other respects, we reject defendant's contentions and shall affirm the conviction and order of probation. FACTUAL BACKGROUND

In the General Election of November 1982, defendant was elected to the state constitutional office of Superintendent of Public Instruction. (Cal. Const., art. IX, § 2.) He assumed office in January 1983. Defendant was elected to a second term in the General Election of 1986 and took office for his second term in January 1987. The charges involved in this litigation concern contracts defendant caused to be made and performed by the Department of Education (DOE) in the years 1986 through 1989. ¹ However, the charges are rooted in defendant's relationship with a nonprofit corporation known as the Quality Education Project, or QEP, which was established in 1982. The factual basis for the charges can best be understood by a chronological account of the significant events.

QEP was incorporated in December 1982 as a nonprofit corporation. ² Defendant told Larry Tramutola, who was QEP's first significantly paid [48 Cal.App.4th 305] employee, ³ that he and his wife, Nancy Honig, started QEP before his election. Throughout the time period involved here QEP's corporate address was at the Honig residence. Nancy filed the periodic legal statements and reports required of a charitable corporation. (See, e.g., Gov.Code, § 12586; Corp.Code, §§ 6210, 6324, subd. (a).) The QEP report for 1982 reflected no income, no expenses, and did not set forth a general purpose for the corporation. Mitra Jazayeri, who lived at the Honig residence and volunteered her services as bookkeeper, testified that at the time there was no office or other facilities for the corporation.

In mid-1983 Tramutola, who made his living as an organizer for unions and similar entities, met with defendant and Nancy. He attended subsequent organizational meetings with the Honigs and others and ultimately was hired by Nancy to work for QEP. ⁴ Tramutola testified that at that time QEP was "[a]n organization looking for a mission to help improve schools." QEP did not yet have a product or a program and Tramutola's job was to go around the state meeting with people such as teachers, principals, parents,

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community activists, and occasional superintendents, to look at school improvement from an organizer's perspective.

In the course of his job Tramutola met Linda Page, who was then principal of an elementary school in Fremont. Initially Tramutola engaged Page in a discussion about school improvement generally, but their discussion soon focused on parental involvement. Parental involvement was a subject of particular interest to Page as she had been attempting to establish a program of parental involvement in her school. Following their initial meeting, Tramutola contacted Page frequently for her advice with respect to school improvement with particular emphasis on parental involvement.

For the 1983 calendar year QEP's annual report reflected income of $60,100 and expenses of $37,278. QEP identified its program services as [48 Cal.App.4th 306] involving a public awareness program, public involvement in the education system, and business community participation. It appears, however, that by the end of 1983 Tramutola, at least, was beginning to focus on parental involvement as QEP's mission.

In early 1984 Tramutola began attempting to implement an experimental program of parental involvement in the Oakland school system. He described the program as experimental "in the sense that we were trying to learn how to do it, to learn to try to boil down a lot of--a lot of possibilities and things that were tangible that the average teacher and the average parent could do without changing their lives." While performing his job for QEP, Tramutola called Page for advice with increasing frequency and eventually, in the fall of 1984, Page asked to be compensated for her assistance. Tramutola relayed that request to Nancy. Thereafter defendant directed his staff to arrange a short-term consultant contract for the DOE to pay Page to work in the Oakland school system. The contract was in the amount of $8,500, which was the maximum permitted under state law for short-term contracts. The contract was arranged by defendant's executive office assistant and she believed that it was funded out of defendant's executive office account.

In its annual report for calendar year 1984, QEP reported income of $83,031 and expenses of $88,781. The report identified QEP's purposes as consisting of a public awareness program, speeches, public involvement in education systems, and business community involvement.

In mid-1985 Tramutola asked Page to work for QEP full time. She agreed and in order to do so she took a leave of absence from her duties in the Fremont Unified School District for the 1985-1986 school year. Tramutola and Page agreed that during the 1985-1986 school year Page would work for QEP exclusively. Tramutola testified that during the 1985-1986 school year the QEP program was still experimental but was getting close to becoming a formal or developed program. Page testified that QEP was at a conceptual or developmental stage without a set program, but that they were working toward that goal.

During the 1985-1986 school year Page worked primarily in Oakland, although she did not report to and was not supervised by anyone in the Oakland school system. She did no work in the Fremont Unified School District and did not report to anyone from that district. She had no contact with, nor reported to, anyone from the DOE. Tramutola testified that during that year Page reported to him and may have reported to Nancy with respect to some things. Page testified that she was directed by Tramutola and may [48 Cal.App.4th 307] have received some instructions from Nancy only at the very end of the school year.

Tramutola did not know how Page was compensated during the 1985-1986 school year. Page did not participate in arranging her compensation and did not know what arrangements were made for her compensation. She knew, however, that her paycheck came from the Fremont Unified School District and that she was compensated at the same salary and benefit levels as she would have received as a principal in the Fremont Unified School District. In fact, defendant directed James Smith, the DOE deputy superintendent in charge of the curriculum and instructional leadership branch, to arrange a

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grant for the Fremont school district to pay Page's salary and benefits while she was on leave of absence during the 1985-1986 school year. Smith set up a grant from DOE to the Fremont district in the amount of $62,190 for the continuation of Page's salary and benefits.

QEP's annual report for the 1985 calendar year showed revenue of $221,330 and expenditures of $123,528. In that year Nancy was paid a salary of $25,000 by QEP.

By 1986 Page had become what Tramutola described as an important part of QEP. QEP began to develop a written protocol in the form of a resource manual and Tramutola said that Page played a major role in that endeavor. Tramutola said that a written resource manual was important to QEP on two levels: first, it would provide tangible things that people could do to try to improve schools; and second, it would assist in fund-raising by providing something tangible to be shown to foundations and other prospective donors. Page agreed that a resource manual was important in that it would provide a product that could be shown to schools as the QEP program. In August 1986 Page and others engaged in a collaborative effort to put together a draft of a resource manual for the QEP program. The first draft was very rough or primitive and the development of the QEP resource manual remained a continuous endeavor for some time.

Tramutola left QEP's employ sometime in 1986. At that time Page was named director and began running the day-to-day operations of the QEP program. In the 1986-1987 school year QEP began hiring additional employees and this was one of Page's responsibilities. She placed advertisements in trade magazines advising interested parties to contact her as director of QEP. She conducted recruitment and interview activities and made decisions about who should be hired, subject to final approval by Nancy. The employees hired to perform field work for QEP...